MIDDLEBURY — The president of eCorp English acknowledged on Thursday that her company’s Middlebury launch has been slowed by low cash flow and a major loan agreement that fell apart, but said a recent infusion of new money and the imminent unveiling of its new software product should right eCorp’s ship and put it back on schedule to becoming a major employer in the area.
“The message is, ‘We are not going belly-up, we are not leaving Middlebury,’” said Deborah Schwarz, founder and president of eCorp English.
It was in early December of last year that state and local officials, amid much fanfare, announced eCorp English’s decision to make Middlebury its base of operations. Established by Schwarz in 2006, the international company offers English language training to corporate officials throughout the world. It accomplishes this, in part, by offering Web-based programs and expert trainers to network directly with clients throughout the world, coaching them on their specific English vocabulary needs.
Originally, eCorp was headquartered in the Mediterranean nation of Malta with sales offices in France, Switzerland and Shanghai, China.
Schwarz last year decided to find a U.S. home for her growing company. Amid successful lobbying efforts by Middlebury College and the Addison County Economic Development Corp. (ACEDC), among others, Schwarz selected Middlebury. She moved eCorp into 6,700 square feet of space at 1197 Exchange St., in Middlebury’s industrial park.
Then-Gov.-elect Peter Shumlin announced in December that the state had put together a successful incentive package for eCorp English that included $175,000 in low-interest loans through the Vermont Economic Development Authority (VEDA); a $200,000 equity investment through the Vermont Seed Capital Fund; and an offer of more than $200,000 in tax incentives through the Vermont Economic Growth Incentive Program. Those tax credits were contingent on eCorp English reaching certain employment milestones during the coming years.
Company officials had conservatively estimated eCorp would employ more than 100 workers in Middlebury by 2013.
But those plans have been slower to materialize than Schwarz had hoped.
At this point, eCorp employs around a dozen employees locally, largely upper-management officials whom Schwarz said are needed to ensure proper structure for the dozens of other workers she said will fill the ranks during the coming months. Schwarz said eCorp will soon hold an open house to recruit 20 “trainer analysts” to coincide with the launch of the company’s new software, called “WordFortune.” Indeed, much of the company’s fortunes are riding on WordFortune, a product that Schwarz believes will revolutionize the manner by which the business world will be able to learn English as second language. She noted the software will work hand-in-hand with eCorp trainers to allow corporate officials to research and learn the specific vocabulary they need to navigate in the business world.
eCorp currently employs six part-time language trainers. The 20 new trainer analysts, Schwarz, will be tasked with making sure clients connect with their assignments to ensure they are completing the program successfully.
Schwarz hopes the new hires will provide a positive signal to investors, state and local officials, and the Middlebury community that eCorp is back on track following a rocky start. She concedes that eCorp began its life in Middlebury “undercapitalized,” a situation she attributed to several factors.
First, eCorp recently phased out an entire segment of its business — face-to-face training of clients — at the same time that it moved into a new home and shifted its focus to development of WordFortune. Company officials had planned to bridge that period of reduced revenue with a loan of more than $4 million from a venture capital group. But that loan agreement fizzled at the eleventh hour, according to Schwarz, when the investor set some unpalatable caveats — including that eCorp not base its corporate offices in Middlebury.
“They felt (Middlebury) was too far off the beaten track and that we would not be able to attract top national leaders and senior management to build the company,” said Schwarz, who noted she has found the opposite to be true.
CASHFLOW PROBLEMS
Meanwhile, eCorp’s expenses have been mounting. She acknowledged the company has not been able to pay some of its bills in a timely fashion, and this has drawn complaints from some area businesses that have provided services to eCorp. Creditors have been asked to accept deferred payments or to be paid in installments.
“This is not what we planned,” Schwarz said. “We have had to ask people’s forbearance and their help, and it has really been very complicated and tough.”
eCorp officials looked for other financial solutions to carry the company through until its software launch.
FreshTracks — a Middlebury-based venture capital fund — and another private investor put up a combined total of $1.1 million, according to Schwarz, who — along with some eCorp board members — have sunk some of their personal resources into keeping the company solvent. The ACEDC and VEDA have also extended some loans, according to Schwarz. In addition, eCorp deferred all the hiring it could and streamlined operations in an effort to reduce expenses, Schwarz said.
“I sincerely believe that if you have a compelling idea, that if you really think you are responding to an idea and think you know how, you must consider no obstacle a reason to stop,” Schwarz said of her approach to eCorp’s recent challenges.
“We must not stop; we are in sight of our goal.”
Schwarz still believes in a bright future for eCorp, a future she believes will blossom after the launch of WordFortune. It’s a product that will initially be offered in China, Japan and France. Plans call for it to be extended to clients in Russia, India, Spanish-speaking parts of South America, Brazil and South Korea in 2013, according to Schwarz.
With that in mind, Schwarz is confident eCorp will meet — and probably exceed — all of the job creation benchmarks prescribed under the state loan and tax credit agreements announced last December. She is even planning for a small, in-house restaurant to feed a workforce that will be interacting during the wee hours of the morning with clients in multiple time zones.
“This is the business I want to build,” Schwarz said. “Now I will let the market speak.”
Reporter John Flowers is at [email protected].