FreeRide.com Receives $30 Million in Funding from Fleet Equity Partners, Goldman Sachs, Hambrecht & Quist and ING Barings

Market Wire, 20050229

FreeRide.com LLC (http://www.freeride.com), the premier online marketing and loyalty-rewards program, today announced it has received $30 million in equity funding from leading institutional investors including Fleet Equity Partners, The Goldman Sachs Group, Inc., Hambrecht & Quist, and ING Barings. FreeRide completed a $12 million round of equity financing in April that was lead by Odeon Capital and NetGain Development Inc. FreeRide.com will use these new funds to support its rapid growth, including the commencement of FreeRide's first consumer oriented marketing campaign, expansion of its technology infrastructure, increasing its facilities and hiring additional staff.

The leading investment partners were carefully selected because of their shared perception of the value of FreeRide's unique assets and positioning in the loyalty-rewards sector, as well as their experience with rapidly growing internet companies.

"We are thrilled to bring such influential investors to this venture," said Jordan Stanley, President and CEO of FreeRide.com.

"FreeRide has spent the past few years building a large and diverse assortment of sponsors and an active and loyal membership base, through largely grass-roots and word-of-mouth efforts. With the new funding we will be able to reach a mass consumer audience. The timing is perfect. In just a few weeks we will launch a revolutionary way for earning FreeRide Points that can be redeemed for the widest variety of unrestricted rewards on the net, including books, CDs, movie tickets at over 25,000 thousand theatres, gas at over 44,000 service stations and gift certificates from dozens of leading retailers and restaurants."

The Stickiest Site on the Net

"One of the prime reasons for Fleet's investment in FreeRide is the unique success FreeRide has had with almost no consumer advertising spending," said Rory Smith, managing director of Fleet Equity Partners. "In addition to unusually active members, FreeRide has achieved site stickiness that bests all competition. In July, FreeRide.com was rated the stickiest site on the Internet, ahead of E-bay, Yahoo, AOL and dozens of other leading sites, and has been among the top three stickiest properties on the Net since then, all as measured by Media Metrix. The extraordinary stickiness of the FreeRide site is not an accident, but is directly correlated to the fact that so many rewards are being received by FreeRide members."

The Loyalty Factor

One of FreeRide's key competitive differentiators is its "Loyalty Factor", which is the measure of points (or miles in the case of other programs) awarded to members versus points actually redeemed by members for free products and services. FreeRide's Loyalty Factor is 80 percent, which means FreeRide members redeem 80 percent of their points for rewards offered on the FreeRide site.

No other loyalty program comes near these results. Indeed, most other programs would fail financially if they did. Breakage (points never redeemed) is a key element of so many other leading loyalty programs.

"One of our attractions to this model is what FreeRide calls 'The Loyalty Factor,'" said Randy Blumenthal, a managing director at Goldman Sachs. "FreeRide's Loyalty Factor greatly surpasses that of any other program and is the most important measure of a loyalty program's success with its members."

Management Team

Advertising industry veterans John Mezzina and Jordan Stanley created FreeRide's unique online loyalty-rewards program. Both were senior executives for almost 20 years at the leading Madison Avenue advertising firm, Young & Rubicam. With their vision and direction, customer loyalty and retention can now occur in the online world as successfully as it has in the offline world.

"FreeRide has a unique management team, almost unmatched on the net in terms of expertise and diversity of experience for such a young company. It's one of the prime reasons for our investment," said Charles Walker, managing partner of Hambrecht & Quist's Access Technology Partners, L.P. "John Mezzina and Jordan Stanley know the advertising industry space as well as anyone. They have a clear vision of how advertising directly to consumers on a one-to-one basis will be fueled, in the future, by the use of a micro-currency like FreeRide points to reward consumers for doing a wide variety of marketer desired actions, ranging from viewing ads to responding to surveys and testing products. The new Chief Operating Officer and Chief Financial Officer, Art Winkleblack, is a proven executive coming from the great corporate training and proving grounds of PepsiCo and Allied Signal.

Ira Belsky, the Executive Vice President for business development, brings vast experience as a transactional lawyer with O'Melveny & Myers, a leading national law firm, and as a senior executive in a number of sizeable businesses. This is a combination that creates enormous intangible value for the organization."

About FreeRide.com

Based in New York City's Silicon Alley, FreeRide.com provides an online loyalty program that awards consumers with FreeRide Points for interacting with marketers and advertisers at FreeRide's site and those of other program participants, including AT&T's WorldNet, Net Grocer and HBO. FreeRide Points are redeemable for the widest array of everyday relevant and unrestricted rewards on the net. With almost 500,000 members, FreeRide's incentive program builds customer loyalty by quickly rewarding its members with points that can be used for over 1300 online and offline product and service offers. Members can choose from quality merchandise such as CDs, monthly Internet service, gasoline, groceries, movie tickets, books, gift certificates and flowers, from hundreds of sponsors such as Beyond.com, Borders.com, Marriott Hotels, Eddie Bauer, Disney Store Online, Toys-R-Us, Saks Fifth Avenue, Tower Records, Olive Garden Restaurants, and Sports Authority.