Zumbox is dead.

Or is it?

The Thousand Oaks company told people using its virtual mailboxes that it would shut down its service April 14. But weeks later, the digital mail service is still available and the company is still in business. Now, it looks like Zumbox is trying to find a buyer or a partner instead of shuttering.

Chief Executive Gordon Adams said just as Zumbox was about to go out of business the company received substantial interest from potential partners and buyers. Optimism that the business will continue in some form led to a decision to keep the service alive.

“While we had some struggles, we do believe there is going to be a future,” he said. “People believe in the concept.”

Since launching in 2007, investors have bought into the concept of delivering physical mail digitally. Zumbox raised about $28 million over the years, with some coming from high-profile business people such as former Walt Disney Co. Chief Executive Michael Eisner. The company has apparently burned through the cash and is down to fewer than 10 employees.

The idea behind Zumbox was to create a single, secure place for people to access and pay their bills and view documents online, rather than signing in to separate accounts, for example, to pay the gas bill, cable bill and Macy’s card. The company also said it could filter out junk mail.

The service allows senders to upload and send digital files to customers who otherwise would receive the same documents in their physical mailboxes. People using Zumbox can still also get their mail delivered to their actual mailboxes. But Zumbox only makes money after people decide to go entirely paperless.

There have been signs that people like paying bills online. For example, banks have been able to convince more consumers to use the bill-paying functions on their own websites.

But the challenges for Zumbox in building a new brand and changing such a fundamental routine as sending and receiving paper mail has met more resistance from both companies and consumers than first expected.

The service charges mailers such as insurance companies a fee if a recipient of their mail has elected to go paperless. The pitch to companies is that digital delivery saves money compared with printing and mailing physical bills and other notices. Analysts said Zumbox-like digital mail services typically charge 20 to 30 cents per mailing, with discounts for large-volume mailers. Adams would not say how much Zumbox charges.

Zumbox hasn’t announced many deals with participating companies, though it has worked with firms such as Western National Insurance Group of Edina, Minn., to offer paperless billing.

But the company has struggled to sign up big companies as well as people who want to go paperless. In many cases, companies only want to use the service if it has been adopted by a large number of their customers, and customers only want to use the service if it’s also used by their banks or other billers – a significant conundrum.

Matt Swain, director at market research firm InfoTrends in Durham, N.C., first reported the company’s shut-down message. He said that trust is another challenge for Zumbox or any virtual mail company looking to convert people to paperless. People are comfortable with receiving paper mail and even some who are willing to pay online still like to receive bills in their real-life mailboxes.

“An issue is: Why should I access my content through Zumbox, a company I have never heard of?” he said. “Even with big names, there’s that privacy concern.”

But Zumbox sees a large market. The company set up virtual mailboxes for 120 million American households. To activate their mailbox, people go to the Zumbox site and ask to receive a physical mailer, which contains a confirmation code that users enter online in order to prevent identity theft.

Adams would not say how many people are using the service. Swain at Infotrends said he didn’t know how many companies were paying for their bill-sending, but it has apparently not been enough.

‘Too expensive’

Zumbox was co-founded in 2007 by Westlake Village entrepreneur Maury Friedman and partner Yarone Goren.

The previous year, the duo’s online education platform, Academy123, was sold to the educational division of Discovery Communications of Silver Spring, Md., for an undisclosed sum.

In 2009, the co-founders hired Donn Rappaport, a direct-marketing industry veteran, as interim chief executive to help raise money to fund a public roll-out of the service. Soon enough, high-profile investments followed from Eisner and Richard Braddock, former chief executive at Priceline.com.

The company also was chasing a subcontracting deal with the United States Postal Service, which was trying to cut costs. The USPS lost $3.8 billion in fiscal 2009 and $8.5 billion in 2010. The deal showed promise for a time, but never did come through.

“We thought it was a valid survival tactic for the USPS,” said Rappaport, who retains a stake in Zumbox. “What we didn’t anticipate was how hard it is to change the status quo.”

In 2010, Rappaport was replaced as chief executive by John Payne, who ran the company until last year.

Zumbox also raised more money. In 2012, the company raised $10.6 million in a funding round led by financial services firm Computershare near Melbourne, Australia.

But recent attempts to find new backers have faltered and existing investors have tightened their purse strings. The company has laid off workers and closed an office in El Segundo. The company now employs only eight people.

Adams began mulling a sale or other deal late last year and has been working with investment bank Mesa Global, which has offices in New York, San Francisco and Los Angeles. Ultimately, company executives decided that the mailbox service would be shuttered last month failing to attract a new partner or a buyer.

“Building the (business) was too expensive,” Adams said. “The money and time to do that as an independent company was more than we were capable of getting investors to pay for.”

Smith now expects a deal to materialize within a month, but he declined to give specifics. If there is no deal, the company could close.

Swain said he thinks Zumbox’s technology linking physical addresses to virtual mailboxes and enabling the sending of digital copies of physical mail has value to potential buyers. That’s because consumer-oriented companies such as banks or e-commerce firms are looking to handle digital mail with customers directly, rather than through third parties such as Zumbox, so he envisions a scenario where a company in those industries could take interest in the virtual mailbox business.

“That’s the market shift we’re seeing,” he said. “We’re seeing a lot more focus on finding consumers at existing destinations.”