« Back

FaceTime Communications Inc. set out to close a large loophole in business IT security, and investors responded with an oversubscribed $15.6 million Series H round.

The round was led by new investor Credit Suisse NEXT II Fund. All existing investors participated in the round, including Sutter Hill Ventures, JK&B Capital and Scale Venture Partners. Sutter Hill has the largest non-majority stake in the company.

FaceTime also announced the formal launch of its Unified Security Gateway hardware. The equipment gives companies control over peer-to-peer, instant messaging and voice-over Internet protocol applications - 60% of Internet traffic - according to company Chief Executive Kailash Ambwani. An increasing number of companies are using those applications to conduct meetings remotely; however, those applications can invite hackers looking to do harm.

"Companies don't want to block [these programs], they want to enable it," Ambwani said. "[USG] is really the first platform that allows you to manage the entire spectrum of Internet traffic. It gives you visibility in everything that is going on."

The company said it planned to raise only $10 million, but investor demand pushed the round higher.

Scale Venture Partners Managing Director and FaceTime board member Sharon Wienbar said consistent revenue reports, quarter-to-quarter, are the attraction.

"These guys have the revenue growth that proves out the market opportunity," Wienbar said.

Ambwani said more and more companies are developing their own enterprise instant-messaging technology. "We are a necessary component," he said.

The company has 1,000 customers for its product, with an average price of $100,000 to $150,000 for the average-sized company. There is also an annual subscription fee for upgrades and support. Ambwani declined to release revenue numbers but said the company will be profitable in nine months and could go public in 12 to 18 months.

Foster City, Calif.-based FaceTime has raised about $50 million to date since a 2001 recapitalization. Prior to that recap, the company raised $35 million to $40 million, according to Ambwani. The company will use the Series H money for expanded marketing and sales and to grow internationally.

« Back