TopTutors.com Inc., an Idealab-backed online tutoring service, has cut most of its staff and scaled down its business dramatically because it was unable to raise another round of funding, according to an executive at the company.
TopTutors CEO Barton Listick says the company will change its focus from directly interacting with consumers to working with schools on providing tutoring services.
"When you go after consumers, it takes a lot of money to build a brand," Listick says. "We couldn't get the funding to go after that larger market."
The company was founded in early 1999. In December 1999, it received an investment from Idealab and its venture arm, Idealab Capital Partners. The terms of the investment were not disclosed, but Idealab partner Larry Gross, the brother of Idealab CEO Bill Gross, took a seat on the board. Larry Gross did not return calls for this story.
When asked whether the company requested further funding from Idealab before cutting the staff, Listick said he couldn't comment.
Idealab's venture investing has slowed since the stock market correction this spring. In April, Idealab filed to go public, but since then, the valuations of its public and private companies have fallen dramatically. Some of the underwriters on the IPO have privately expressed doubts that institutional investors are sufficiently interested in Idealab's offering to ensure that it hits the public markets this year. The Idealab portfolio is top-heavy with companies in business-to-consumer retail and online advertising, two sectors that were hit particularly hard by the downturn.
TopTutors was based in Pacific Palisades, Calif., but moved down the Southern California coast to Santa Monica after it secured the Idealab investment. In January, the company signed a five-year, $1.6 million lease for 11,100 square feet of office space. At its largest, Listick says, TopTutors had about 40 employees.