VentureBeat
By Camille Ricketts
NComputing, maker of greener computing devices that consume only 1 watt of electricity per user, has qualified for purchase rebates and rate discounts from several major utilities in the U.S. and Canada. Based in Redwood City, Calif., the company has already qualified for reduction-energy incentives via institutions like the Illinois Department of Commerce and Economic Development and the New York State Energy Research and Development Authority.
The new wave of rebates cover amounts up to the whole purchase price of NComputing products. Utility company Seattle Light offers a $25 rebate on every NComputing device, for example. San Diego Gas & Electric and Southern California Edison offer similar options.
Known for low-cost, thin-client computers, its green products are based on the idea that most applications don’t require the full power drawn by most computers, 110 watts on average. The company’s virtual desktop system allows multiple users to share the power capacity of one PC. Its devices, which weigh only a few ounces, can run Windows and Linux and allow users to connect their own monitors, mice and keyboards. These devices are then connected to the one shared PC. The company says its technology has the potential to reduce e-waste by up to 6.7 million metric tons per year.
NComputing has raised $36 million to date, $28 million last year from Menlo Ventures and an $8 million first round of funding led by Scale Ventures before that.
Wall Street Journal
By Pui-Wing Tam
SAN FRANCISCO -- At a recent board meeting, Jaspersoft Corp. Chief Executive Brian Gentile found himself stuck between two camps: the savers and the spenders.
One faction of the San Francisco software company's board wanted Mr. Gentile to preserve the start-up's $15 million cash reserves by keeping expenses down. Other directors urged him to grow and take market share from rivals weakened by the recession.
"It was sweaty, it was tense," said Mr. Gentile of the November meeting. "It was literally a two-hour rejustification of why we'd defy the odds."
Like Jaspersoft, many start-ups are finding themselves locked in boardroom dramas as they navigate the tricky tightrope between how much to cut and how much to grow. These debates have taken on new urgency because fresh financing is hard to come by and, for some, cash is running low.
Silicon Valley start-ups raised $1.14 billion in venture capital in the first quarter, down 57% from a year earlier -- the region's lowest investment in at least a decade, according to VentureSource.
"Boards are asking hard questions, and everyone is being put to the test," said Jeffrey Kuhn, managing partner at FLG Partners LLC, a Palo Alto, Calif., firm that provides financial and operations expertise to start-ups.
The issue is acute in Silicon Valley, where start-ups have typically burned through savings to chase growth.Google Inc., for instance, ramped up during the dot-com bust earlier this decade and ended up a behemoth.
"Companies can't just save their way to success," said Rory O'Driscoll, a Jaspersoft board member and investor.
At Cast Iron Systems Inc., a 100-person software company, CEO Ken Comee recently had to persuade a skeptical board to allow him to boost spending. The Mountain View, Calif., start-up had scaled back last year when it laid off five people and left five jobs unfilled. That trimmed quarterly spending by 10% to $500,000.
But Cast Iron, which makes software that connects older business software with newer online programs, doubled its annual revenue in 2008, said Mr. Comee. So in December, he outlined a 2009 plan to his six-member board that called for growth and hiring at the company, which has yet to record a profit.
Directors quashed Mr. Comee. "We kept pushing Ken back," said Promod Haque, a Cast Iron board member and venture capitalist at Norwest Venture Partners, which has invested in the start-up. "There were a lot of concerns about the markets."
Mr. Comee began working to prove that Cast Iron was in a position to grow, despite the recession. The company soon landed partnership agreements with Microsoft Corp., Oracle Corp. and Google, which generated sales referrals from the giants.
In March, Mr. Comee re-approached the board with a spending plan. After showing how the new partnerships were boosting Cast Iron's revenue, the board gave him a green light to hire. "Ken had built credibility," said Mr. Haque.
Since then, Cast Iron has recruited three new employees and plans to hire another three.
Jeff Jensen, the CEO of Fluxion Biosciences Inc., is dealing with the opposite problem: a board member who is pushing the small company to add expense.
The 23-person South San Francisco, Calif., start-up, which makes sophisticated chips for bioscience firms, has acted cautiously in the recession by reducing its hiring target and keeping spending flat at $300,000 a month, Mr. Jensen said.
But board member John Steuart, a venture capitalist at Claremont Creek Ventures, is prodding Mr. Jensen to hire. Mr. Steuart said Fluxion has cutting-edge technology but "sooner or later the competition may catch up." He wants the start-up to recruit a financial controller so Mr. Jensen and his team can concentrate on sales.
Mr. Jensen is holding Mr. Steuart off because he is reluctant to add employees who aren't directly involved in products or sales, given the recession. "We're trying to be pragmatic," said the CEO.
At Jaspersoft, Mr. Gentile said the 80-person San Francisco company's sales picture became cloudy as the markets started to gyrate in the fall. That raised questions about how Jaspersoft, which makes business-analytics software, should proceed.
Mr. Gentile didn't want to cut back too much since Jaspersoft, which has raised $47.5 million in venture funding, had $15 million in the bank. So he constructed a 2009 plan that allowed expenses to rise slightly from 2008 levels, which were about $1 million per quarter. For some board members, that wasn't enough. At the November board meeting, director David Welsh, a partner at private-equity firm Adams Street Partners, took a more cautious stand. "I was spooked" by the downturn, he said, adding that he stressed cash preservation.
Others disagreed. Mr. O'Driscoll, a venture capitalist at Scale Venture Partners, said he argued "it's a good time to grow if you can." He said Jaspersoft had enough resources that it could afford to wait to see if it needed to cut.
In the end, Mr. Gentile said he "broke through" with data showing a robust future-sales pipeline. He also presented a contingency plan that included cuts at the firm if business soured.
In recent months, Jaspersoft has bumped up spending, hiring three new sales employees. "No matter how good you're doing, you have to look over your shoulder" at the economy, he said.
As Search Gets Cut, Retention-Focused Retailers Find Value in Channel's Cost-Effectiveness and
Trackability
AdAge
By Natalie Zmuda
NEW YORK (AdAge.com) -- It's likely the least sexy tool in your marketing arsenal, but it could be the one that delivers real results.
E-mail has emerged as a recession darling, as retailers look to proven programs that are cost-effective and results-oriented. That's led to increasing investment in technologies that better target customers and serve up more enticing messages.
"The economy has energized this channel," said Ryan Deutsch, VP-strategic services and market development at StrongMail. "It's become the rock star of direct marketing in a lot of these retail organizations because it's the most cost-effective and most trackable." Thanks to its cost-effectiveness and retailers' recession-era emphasis on retention -- Shop.org says that the number of companies focused on retention has nearly doubled in the past year -- experts say few cuts are being made to e-mail budgets, while areas including paid search, affiliate marketing and social marketing are coming under scrutiny.
A Shop.org study shows that 30% of retailers are spending less than originally planned on their web businesses overall while 24% are spending more. Of those spending less, more than half said search spending is being affected, while about a quarter said affiliate marketing and social marketing are taking a hit. By contrast, only 4% of retailers said budget cuts would affect e-mail marketing. Of those increasing investments, e-mail marketing will be the beneficiary at 65% of retailers.
"It's not sexy, but it delivers results, and it's focusing on existing customers," said Scott Silverman, executive director of Shop.org. "E-mail technology continues to advance and allows retailers to be smarter. It's not about sending more e-mail; it's about more-targeted and more-relevant e-mail."
Solid ROI
Indeed, retailer Zappos.com said it is in the process of building out a more robust e-mail program because it's found that e-mails have a noticeable impact on sales. "Right now, it's just a mass mailing," said Michelle Thomas, brand-marketing manager. "We're getting more sophisticated in our segmentation approaches. ... We're investing more."
Experts say investment is flowing into the area because optimizing e-mail lists and upgrading to new technologies can be done quickly and offers a solid return on investment. In the Shop.org study, e-mail also emerged as retailers' most successful marketing tactic.
"Because of the economy and how efficient e-mail is, it's definitely taken precedence over other projects that were longer term," said Mr. Deutsch. "It's low-hanging fruit. Dollars go into the e-mail channel [and companies] know that in four to 12 weeks they'll see a return."
Enhancing e-mail lists with demographic data, for example, can improve performance threefold, Mr. Deutsch said. That upgrade can happen in less than eight weeks. Retailers are also revamping e-mail templates to stress value and discount offers, and they are looking to integrate social-networking tools into their e-mails. That involves adding a link to allow recipients to share the e-mail with friends.
Preference centers, which allow customers to opt in to receive communications, are another area retailers are embracing. Flower retailer FTD, for example, allows customers to choose to receive e-mail reminders to send gifts for just about every holiday in existence, in addition to custom settings for birthdays and anniversaries.
"That one is really exciting," said Mr. Deutsch, whose company counts FTD as a client. "I'm telling them to remind me to buy from them. Talk about a high-conversion program."
The venture-capital community has also taken notice of email's position of relative strength: Last week e-mail provider ExactTarget received one of the year's largest rounds of private investment -- $70 million from firms such as Battery Ventures and Scale Venture Partners.
Indianapolis Star
If venture capitalist Rory O'Driscoll is right, ExactTarget is about to take a rocket ride.
O'Driscoll's firm, Scale Venture Management, just placed a big bet on the Indianapolis online marketing company.
He has been down this road before. About 31/2 years ago, he invested in another online marketing company, Omniture, which since has more than quadrupled in size. With a little more than $70 million in annual revenue and 410 employees, ExactTarget is about where Omniture was when Scale bought in. Now Omniture is a public company with $300 million in revenue and 13 overseas offices.
To help ExactTarget duplicate that performance, O'Driscoll and two other investors, Battery Ventures and Montagu Newhall, have agreed to sink $70 million into the company.
"When you see something work as well as Omniture with the same set of circumstances, you can have a high degree of certainty that it will work out," O'Driscoll said. ExactTarget's revenue has increased each quarter for more than eight years, and it has posted a profit each quarter for more than three years. "They didn't need the money to survive," O'Driscoll said.
"They didn't need the money to grow. They needed the money to grow faster."
Scott Dorsey first sought money from Wall Street. A co-founder of ExactTarget, Dorsey and his crew tried to do an $86 million initial public stock offering. But it wilted when the market went south. By Labor Day last year, they knew it was time to change directions. So they tapped an increasingly interested private-equity market.
ExactTarget's first international office will open in Europe in about 30 days. Its plan to expand from 380 employees Jan. 1 to 550 by Dec. 31 is on track, Dorsey said. And new products are in the pipeline.
O'Driscoll, who was about to leave London en route to his home near Silicon Valley last week, likes finding good companies off the beaten path. Omniture and ExactTarget fit that description, but what really impresses O'Driscoll is the local company's thrift. Since its 2000 founding, the company has spent just $10 million to build a company with annual revenue seven times that amount. "If you're going to give a guy a lot of money, you like to know he's able to handle it," O'Driscoll said. "They're a great group of entrepreneurs."
The group launched ExactTarget in December 2000. It included Dorsey and Peter McCormick, who remain with the company, and Chris Baggott, who since has founded Compendium Blogware here. Bob Compton, who remains ExactTarget's chairman, led a round of angel investing that was followed by a round of private- equity money.
The company based on Monument Circle now has Fortune 100 clients sending millions of permission-based e-mails each month to clients, including The Indianapolis Star. Driscoll is convinced that by growing through the downturn, ExactTarget will be poised to dominate the $1 billion market when the economy recovers.
"These guys aren't just going to be the winners, they're going to be the clear winners," O'Driscoll said. "We're talking 25 to 30 percent market share."
Do the math: That's $300 million in annual revenue.
The IPO can wait.
ZDNet
By Phil Wainewright
After last week's announcement of a $75 million VC funding round raised by Workday, I thought it would be a while before I heard of another SaaS company raising a similar sum. In the event, it took just a week. On Wednesday, on-demand email marketing provider ExactTarget announced a $70 million round.
It seems there's plenty of VC money available for the right SaaS proposition, which bodes well for the industry's prospects. I spoke today with ExactTarget's CEO Scott Dorsey and he told me the company had found "an immense amount of interest from late-stage VCs that don't usually get the chance to invest in such a late-stage SaaS venture."
ExactTarget is something of a special case in that it filed for an IPO in December 2007, but found its plans thwarted by the bleak IPO climate prevailing since then. The new round of funding brings in roughly the same level of cash as the company was seeking from the IPO, and coincides with the company finally withdrawing its S-1 filing. In a VentureWire interview, Rory O'Driscoll of new investor Scale Venture Partners explained its motives:
"We can't control when the IPO window opens, but frankly we can take advantage of the conditions … This is an opportunity to own this company for the next couple years while it continues to grow."
O'Driscoll, who is joining ExactTarget board, knows quite a bit about SaaS growth having invested in SaaS web analytics provider Omniture prior to its IPO and still serves on its board. Regular readers will know that I often refer to the cash demands of the SaaS model at high growth rates as outlined by Omniture's CEO Josh James, and indeed did so when discussing Workday's funding round last week. Interestingly, though, Dorsey told me that ExactTarget doesn't see itself facing the same degree of funding need, pointing out that the company is sustaining year-on-year growth rates above fifty percent while reporting a profit for the last thirteen consecutive quarters. On 2007 revenues of $70 million, profits were $2.5 million, reports VentureWire.
Although some of the cash will go on infrastructure spending, Dorsey told me that ExactTarget will also be funding more product development to bring on new services, in particular around taking advantage of social media. There will be some big-ticket spending on international expansion too, which he said the company will pursue with a mix of operational growth and acquisition.
TheDeal
By Olaf de Senerpont Domis
Another tech IPO is ready to step into the limelight. OpenTable Inc., a San Francisco company that operates an online restaurant reservation network, set its IPO terms. The company, which filed to go public in January, said it aims to raise up to $42 million by selling 3 million shares for between $12 and $14 each.
The IPO would provide a rare public exit for OpenTable's VC and strategic backers. Its largest shareholder is Benchmark Capital, with 26.4% of OpenTable. Impact Venture Partners owns 17.5%, IAC/InteractiveCorp owns about 11%, and Integral Capital Partners has a 7.5% stake.
This follows news last week from SolarWinds Inc., a venture-backed developer of network management software, that it has set the terms of its IPO. In a filing with the Securities and Exchange Commission, the company said it plans to raise up to $139 million and offer its shares at between $9.50 and $11.50 each. The company hasn't announced its expected pricing date, but it is estimated to debut later this month.
SolarWinds' update follows one a week earlier from DigitalGlobe Inc. The high-resolution satellite imagery company, which filed to go public in April of last year, announced its aim to raise up to $265 million by offering its shares at a price between $16 and $18 apiece. The company's shares are expected to begin trading May 14.
Lest we get too excited about the return of the IPO market, let us remember that not everyone is champing at the public bit. On Wednesday, e-mail marketing software provider ExactTarget withdrew its IPO. The company, which filed to go public in 2007, killed its IPO plans after announcing $70 million (roughly the amount it had hoped to raise in the offering) in VC financing from Battery Ventures, Scale Venture Partners and Montagu Newhall Associates.
VentureBeat
By Camille Ricketts
ExactTarget, a provider of software tools for businesses to run e-mail marketing campaigns, has withdrawn its $86 million initial public offering bid after closing $70 million in capital today. The company says the money will be used to open offices overseas and extend its reach in text messaging and social networking. ExactTarget says it has not fully canceled plans to go public — first filed in December 2007 — but has postponed them indefinitely.
Indianapolis-based ExactTarget counts CareerBuilder, Expedia and Gannett among its major clients. It also remains seemingly untouched by the economic downturn, reporting a 40 percent jump in revenue for last quarter and continuing its three-year streak of profitability. Deferring its IPO dreams will actually give the company greater flexibility and position it better for a sale in the future.
Battery Ventures, Scale Venture Partners, and Montagu Newhall provided the recent round of capital.
VentureWire
By Ty McMahan
ExactTarget Inc., an email marketing company that had been in registration for an initial public offering since 2007, has postponed those plans and raised a $70 million round of venture capital.
The new funding, provided by Scale Venture Partners, Battery Ventures and current shareholder Montagu Newhall, will provide ExactTarget with a similar level of funding it sought to raise when it filed to go public in December 2007. Instead of trying to force its offering out in a difficult market, ExactTarget decided to take the cash and withdraw its registration.
Nikitas Koutoupes, a partner at Insight Venture Partners, an ExactTarget shareholder that didn't participate in the latest round, said the board of directors' discussions to postpone the IPO in favor of the funding led to a "unanimous, clear decision."
"It's a better path than the IPO because it achieves a lot of the same objectives and at the same time positions us to make some investments and take the company to market at a much larger scale," Koutoupes said.
ExactTarget's software enables clients to create, target, deliver, track and manage permission-based email marketing communications. The company has managed campaigns for brands including Careerbuilder.com, Expedia.com, Florida Power & Light, Gannett Co./USA Today, the Indianapolis Colts, Home Depot, the Leukemia & Lymphoma Society, Liberty Mutual Group and Papa John's.
ExactTarget has recorded 13 consecutive quarters of profitability, generating a profit of $2.5 million in 2007 and $1.7 million for the first six months of 2008, according to its most recently amended S-1 filing from September. Sales have been growing each year, reaching $48 million in 2007 and more than $70 million in 2008.
This week ExactTarget announced it had welcomed 250 new direct clients in the first quarter and increased sales by 40%. That would mean it recorded $22 million in first-quarter sales based on the $15.7 million reported last year, an annual run rate of $88 million.
Rory O'Driscoll, managing director at Scale Venture Partners, said the investment was an opportunity to own part of a company that would likely have been public in better economic conditions. He said the new funding will enable the company to meet growing demand for its products and expand internationally.
"The world is moving to a place where every business is going to communicate predominantly through email and digital tools," O'Driscoll said. "The company is executing well and they're the largest and fastest-growing in the space."
The investment could also create some liquidity. O'Driscoll said early investors including Insight have been offered an opportunity to sell shares. He declined to say whether any will participate or how large a stake the two new investors hold. In July 2004, the company raised $10.5 million from Insight, according to VentureWire archives.
Koutoupes declined to say whether Insight will sell shares. He said the firm is happy with its ownership position and felt no need to participate in the new round.
ExactTarget's latest S-1 filing showed that Insight owned 35% of the company as of Aug. 31, while Montagu Newhall owned 9%. The rest of the company's shares were held by executives and directors.
Bloomberg Professional
By Tim Mullaney
May 6 (Bloomberg) -- ExactTarget Inc. raised $70 million in venture capital, the second-biggest such deal in the U.S. this year, after the e-mail marketing service company canceled plans for an initial public offering.
ExactTarget, whose clients include health insurer Wellpoint Inc. and travel agency Expedia Inc., will use the proceeds to expand internationally, according to a statement today. The money came from new investors Battery Ventures and Scale Venture Partners, as well as existing investor Montagu Newhall.
The amount is similar to what the Indianapolis-based company had aimed to raise in an IPO. Only one venture capital- backed startup has gone public since August as the recession reduced investors' appetite for risk.
"This is much better than an IPO," Chief Executive Officer Scott Dorsey said in an interview, citing the volatile stock market. "In this environment, it's the best path, and it positions us for an IPO down the road."
The company officially withdrew its IPO registration today, according to a regulatory filing.
The $1 billion market for e-mail marketing services will keep expanding as consumers pay more bills and conduct more business online, making every e-mail a chance to sell more, said Rory O'Driscoll, a partner at Scale in Foster City, California.
"They are the biggest company in the space, and the fastest growing," O'Driscoll said in an interview. "They've raised $16 million before today and they've built a $100 million business."
ExactTarget's 2008 sales rose 50 percent last year to $72 million, according to O'Driscoll. The company made $1.7 million in profit in the first half of 2008, according to its filings.
The only bigger venture deal this year is the $75 million raised last month by Workday Inc., a software company based in Pleasanton, California, said Emily Mendell, a spokeswoman for the National Venture Capital Association in Arlington, Virginia.
TechMeme
By Leena Rao
Marketing email software provider ExactTarget has secured $70 million in funding led by Battery Ventures, with Scale Venture Partners and Montagu Newhall participating. The company says it will use the money to expand its international presence.
The company says that the $70 million is a similar level of funding it sought to raise in its December 2007 application for an initial public offering. ExactTarget will delay its IPO plane and has withdrawn its application with the SEC to trade on the Nasdaq under the symbol EXTG.
ExactTarget's software provides enterprises with email marketing platform that powers everything from email coupon offers and automated fraud alerts to e-statements and SMS text messages. ExactTarget's software provides email marketing tools for a widespread group of big-name clients, including CareerBuilder.com, Expedia.com, the Gannett Co., and The Home DepotThe software is also integrated on Salesforce.com's AppExchange and Microsoft Dynamics CRM.
paidcontent.org
By Joseph Tartakoff
Two years after filing for an IPO, ExactTarget said Wednesday it would take venture capital money instead. The e-mail marketing company said it had secured $70 million in equity financing from Battery Ventures, Scale Venture Partners and Montagu Newhall. ExactTarget said it would use the influx of cash to accelerate its growth and expand outside the United States. The company said it would soon open its first international office. ExactTarget also said it would delay plans for an IPO and withdraw the application it had submitted in December 2007 to trade on the Nasdaq under the symbol EXTG.
ExactTarget's software is used by companies, including CareerBuilder.com, Expedia.com, and Gannett (NYSE: GCI), to manage their e-mail marketing campaigns. The company says that despite the economic slowdown its sales continue to rise. On Tuesday, ExactTarget reported its 33rd straight quarter of revenue growth, as its sales jumped 40 percent. ExactTarget says it has now been profitable for over three years. The company has more than 410 employees.
Erika D. Smith
More than a year after filing to raise $86 million in an initial public offering, Indianapolis-based ExactTarget has changed its mind.
Instead, the e-mail marketing services firm will stay private. It will use $70 million in venture capital that it says it secured today from three firms.
"In today's environment, this is a much better path than an IPO," said Scott Dorsey, co-founder and CEO of ExactTarget.
The money will help the tech company expand both here and abroad.
Within the next month, the company will announce details of its first international office. Dorsey indicated it will be in Europe.
Other expansion plans include acquistions, both to grow geographically and to expand ExactTarget's technological offerings. The company recently began offering text messaging and social networking to its clients, and is looking to bolster those services.
The $70 million will help all of that happen, Dorsey said.
Led by Battery Ventures, the venture-capital deal also includes investments from Silicon Valley's Scale Venture Partners and Montagu Newhall.
Michael Brown, general partner at Battery Ventures, and Rory O'Driscoll, managing director at Scale Venture Partners, will join ExactTarget's board of directors as part of the financing deal.
"ExactTarget is enjoying a lot of momentum and has the right ingredients to continue to dominate a large and growing market," Brown said in a statement. "The company has a superior technology platform, a stable of extremely satisfied blue chip customers, and a team with the vision and ability to deliver on a huge opportunity."
Earlier this week, ExactTarget said it gained 250 new clients, posted a 40 percent increase in sales and had its 13th consecutive profitable quarter. New clients included Pier 1 Imports, SkyMall and the Minneapolis Star Tribune.
The company also added more than 30 new employees during the quarter, increasing its work force to 410.
Media Post
Email service provider ExactTarget, which has withdrawn its application to go public, said Wednesday that three venture capital firms have infused it with $70 million in capital.
The company, which had four executives attending the Summit, said the funds amount to "a similar level" of funding to what it expected to raise in its initial public offering, which it announced it was pursuing in December 2007. The three investors are Battery Ventures, Scale Venture Partners and Mantagu Newhall.
ExactTarget said this week that it added more than 250 new clients and upped sales by 40% in the first quarter, though it did not provide a revenue figure. Clients with which agreements were reached in the quarter include Pier 1, SkyMall and the Minneapolis Star Tribune.
CEO Scott Dorsey said the company has been profitable for three straight years, but "we know a significant amount of market opportunity remains both domestically and internationally" and the $70 million will help accelerate growth. The company said it will announce the location of its first international office in the next 30 days.
ExactTarget has pulled its application to go public on the NASDAQ in the face of difficult market conditions. Fellow email service provider Constant Contact's stock was trading in the $16 range Wednesday, down from a 52-week high of $21.24, but up from a low of $10.32.
Battery Ventures' Michael Brown, who will join the board of directors, said, "ExactTarget is enjoying a lot of momentum and has the right ingredients to continue to dominate a large and growing market."
ClickZ
By Enid Burns
E-mail marketing company ExactTarget has secured $70 million in venture capital funding. The money further delays plans for an IPO, but gives the company the funds it says it needs to service the global interest of its clients.
ExactTarget will use the investment to reinforce its U.S. offices, but also to open offices internationally. The money will also support product development and, possibly, acquisitions. "All of our growth to date has been organic; we have yet to do an acquisition," ExactTarget CEO Scott Dorsey told ClickZ. "We will selectively look at acquisitions that fit with our longer term vision."
Indianapolis-based ExactTarget has 420 employees, up from about 380 at the beginning of the year. Dorsey said it expects to finish the year with a head count above 550. "The next phase for us will be opening more offices around the country. We already have a presence where our enterprise customers exist," said Dorsey. He added the company expects to announce its first international office within the next 30 days.
The hosted e-mail service provider boasts clients such as HomeDepot, CareerBuilder.com, Papa Johns, WellPoint, and Gannett. In Q1 it added 250 new clients, among them Pier 1 Imports, SkyMall, and Minneapolis Star Tribune. The company hopes to serve its multinational clients with regional offices around the globe.
A portion of the funding will go to product development for both small- to mid-sized business and large enterprise clients. In addition to e-mail, ExactTarget now offers SMS, voice, landing pages, and social network communities. "[This] allows us to build more depth," Dorsey said.
The investment was led by Battery Ventures. Silicon Valley's Scale Venture Partners also contributed, and Montagu Newhall joined the round as a repeat investor. The $70 million round delayed plans for an initial public offering filed back in December 2007. While ExactTarget was actively seeking funds, it has been profitable for three years.
"We've had 33 consecutive quarters of revenue growth, and 13 consecutive quarters of profitability," said Dorsey. "We have bigger ambitions, to help build out our global footprint. It's really about our ambition and a bigger vision, and one-to-one marketing technology."
WSJ
A closed-off IPO market is allowing some later-stage venture capital firms to buy into private companies that in past years might already be public.
Such is the case for Battery Ventures and Scale Venture Partners, which have participated in a $70 million venture capital round for ExactTarget Inc., an email marketing company that has been in registration for an initial public offering since 2007.
"We can't control when the IPO window opens, but frankly we can take advantage of the conditions," said Rory O' Driscoll, managing director at Scale Venture Partners. "…This is an opportunity to own this company for the next couple years while it continues to grow."
The new funding, provided by Scale, Battery Ventures and current shareholder Montagu Newhall, will provide ExactTarget with a similar level of funding it sought to raise when it filed to go public in December 2007. Instead of trying to force its offering out in a difficult market, ExactTarget decided to take the cash and withdraw its registration.
Nikitas Koutoupes a partner at Insight Venture Partners, an ExactTarget shareholder that didn't participate in the latest round, said the board of director's discussions to postpone the IPO in favor of the funding led to a "unanimous, clear decision."
"It's a better path than the IPO because it achieves a lot of the same objectives and at the same time positions us to make some investments and take the company to market at a much larger scale," Koutoupes said.
The investment could also create some liquidity. O'Driscoll said early investors like Insight have been offered an opportunity to sell shares. He declined to say if any will participate or how large a stake the two new investors hold. In July 2004, the company raised $10.5 million from Insight, according to VentureWire archives. Koutoupes declined to comment whether Insight will sell shares. He said the firm is happy with its ownership position and felt no need to participate.
ExactTarget's latest amended S-1 filing from September showed that Insight owned 35% of the company as of Aug. 31, while Montagu Newhall owned 9%. The rest of the company's shares were held by executives and directors.
ExactTarget has perhaps the numbers to be publicly traded, at least in past years. It's recorded 13 consecutive quarters of profitability, generating a profit of $2.5 million in 2007 and $1.7 million for the first six months of 2008, according to its S-1 filing. Sales have been growing each year, reaching $48 million in 2007 and more than $70 million in 2008. This week ExactTarget announced it had welcomed 250 new direct clients in the first quarter and increased sales by 40% - that would mean it recorded $22 million in first-quarter sales based on the $15.7 million reported last year, an annual run rate of $88 million.
In the past year, more than a dozen companies that withdrew IPO filings have gone back to the venture well, but most of them, like Alien Technology Corp., Anacor Pharmaceuticals Inc. and BioTrove Inc., raised more cash from existing shareholders. A few others have added new investors to the syndicate like ExactTarget, such as:
BG Medicine Inc. - The molecular-diagnostics company picked up $40 million in Series D financing in July with three new investors participating, six months after pulling its planned offering.
Biolex Therapeutics Inc. - After withdrawing its IPO registration in February 2008, the biopharmaceutical company moved forward with a $60 million Series D financing round in part from new investors Clarus Ventures and OrbiMed Advisors.
Broncus Therapeutics Inc. - A new $38 million Series G round led by new investor Ares Life Sciences could position the pulmonary-device company for a second shot at a public offering after forgoing plans in July.
Initiate Systems Inc. - In June, the software provider pulled its registration and then raised $26 million from a list of investors that included newcomers Paladin Capital Group, Dunrath Capital, EMC Corp. and Informatica Corp. BlueCross BlueShield Venture Partners and SandBox Industries later took part in a $5 million round announced in the fall.
Company to Use Funds to Fuel International Expansion, Accelerate Customer-Focused Innovation
INDIANAPOLIS (May 6, 2009) - ExactTarget, a leading provider of on-demand email and one-to-one marketing solutions, announced today that it has inked a $70 million deal with three venture capital firms that will accelerate the company's growth and expand its international presence.
Led by Battery Ventures, the round of financing includes investments from Silicon Valley's Scale Venture Partners and repeat investment by Montagu Newhall and will provide ExactTarget a similar level of funding it sought to raise in its Dec. 2007 unexercised application for an initial public offering.
The round is one of the largest venture capital rounds of investment in the nation this year.
"We have posted three consecutive years of profitability and continued quarter on quarter growth with the addition of thousands of new direct clients, but we know a significant amount of market opportunity remains both domestically and internationally," said Scott Dorsey, co-founder and chief executive officer of ExactTarget. "The investment by Battery, ScaleVP and Montagu Newhall accelerates our ability to develop new innovations while maintaining the operational flexibility we have enjoyed as a privately held firm."
ExactTarget will delay its plans for its initial public offering and has withdrawn its application with the Securities and Exchange Commission to trade on the Nasdaq under the symbol EXTG.
"ExactTarget is enjoying a lot of momentum and has the right ingredients to continue to dominate a large and growing market," said Michael Brown, general partner at Battery Ventures. "The company has a superior technology platform, a stable of extremely satisfied blue chip customers, and a team with the vision and ability to deliver on a huge opportunity."
Brown, who currently serves as a board member of Fingerhut, will join the ExactTarget board of directors as part of the financing.
News of the equity financing round comes one day after ExactTarget announced a record-setting first quarter during which it welcomed 250 new direct clients and increased sales by more than 40 percent over the same period in 2008, marking the thirty third consecutive quarter of growth and thirteenth consecutive quarter of profitability for the company.
"Ten years ago, ScaleVP began investing in market-leading SaaS companies like ExactTarget," said Rory O'Driscoll, managing director at Scale Venture Partners. "ExactTarget has been executing beautifully to make one-to-one marketing a critical and cost-effective solution for companies around the world. We believe the market is ripe for the kind of innovation ExactTarget delivers, and the company's strong first quarter highlights our confidence in the management team's ability to leverage continued growth for market expansion."
O'Driscoll, who currently serves as a board member of Omniture, will join the ExactTarget board of directors as part of the financing.
The company's positive quarterly performance follows the posting of its best-ever annual performance in 2008 that saw revenues up more than 50 percent, the addition of more than 1,000 new direct clients, the hiring of nearly 100 new employees and the introduction of integrated multi-channel messaging into the company's software as a service platform.
"In a difficult economy, ExactTarget continues to consistently post phenomenal results and remains a huge performer for us," said Jim Lim, partner at Montagu Newhall. "This investment makes ExactTarget one of our largest holdings and presents an exciting opportunity to continue being a part of the industry's premier technology provider."
ExactTarget plans to further expand its international presence in 2009 and will announce the location of its first international office in the next 30 days.
"Battery and ScaleVP have tremendous experience helping software and technology companies broaden their product platform and expand internationally," Dorsey said. "Their expertise coupled with Montagu Newhall's continued support and involvement provides the resources we need to realize our global expansion goals."
About ExactTarget
ExactTarget, Inc. is a leading provider of on-demand email marketing software solutions. The company's suite of on-demand one-to-one marketing applications enable clients to send business-critical and event triggered communications to increase sales, optimize marketing investments and strengthen customer relationships. ExactTarget offers four editions of its on-demand software application along with integrated solutions such as ExactTarget for Salesforce.com AppExchange, ExactTarget for Microsoft Dynamics CRM and ExactTarget for Omniture Genesis. ExactTarget offers a range of optimization services including support, implementation and training, integration, deliverability, account management, design and deployment and strategic consulting. ExactTarget's software powers permission-based email communications for thousands of organizations including CareerBuilder.com, Expedia.com, Florida Power & Light, Gannett Co., Inc/USA TODAY, the Indianapolis Colts, The Home Depot, The Leukemia & Lymphoma Society, Liberty Mutual Group, Papa John's and Wellpoint, Inc. For more information, visit www.exacttarget.com or call 1-866-EMAILET.
About Battery Ventures
Since 1983, Battery has been investing in technology and innovation worldwide. The firm partners with entrepreneurs and management teams across technology sectors, geographies and stages of a company's life from start-up and expansion financing to growth equity. Battery has supported many breakthrough companies around the world, including: Akamai Technologies (NASDAQ: AKAM), Cbeyond (NASDAQ: CBEY), LIFFE (acquired by EuroNext), Omniture (NASDAQ: OMTR), Its current portfolio includes such emerging firms: Angie's List, Bazaarvoice, Consona Software, Fingerhut Direct Marketing, and Guidewire. From offices in Boston, Silicon Valley and Israel, Battery currently manages more than $3B in committed capital. For more information, visit www.battery.com.
About Scale Venture Partners
Based in Foster City, California, the ScaleVP team is a long-standing partnership with a consistent, top quartile track record of returns. Scale Venture Partners' insight-driven investment strategy, extensive operating networks and go-to-market expertise help identify and build leading portfolio companies in technology and healthcare markets. The ScaleVP team's proven skill-set and active approach provides entrepreneurs a competitive advantage for growth and category leadership. Representative portfolio companies include Alimera Sciences, Discera, Frontbridge, Glu Mobile, mBlox, Monolithic Power Systems, National Healing, NComputing, Omniture, Orexigen, ScanSafe, Somaxon, Vantage Media, Waterfront Media, Xceive and Zogenix. For more information, visit www.scalevp.com.
About Montagu Newhall
Montagu Newhall Associates, founded in 2000, manages four venture capital funds of funds with a combined total of over $1.4 billion in committed capital. Investors in these partnerships, which include family offices, corporate pension funds, endowments, foundations and other venture capitalists, are provided access to diversified portfolios of top-tier venture capital funds and a select number of high quality, later-stage, direct venture capital investments. The Montagu Newhall Associates team leverages its substantial network, relationships and investment experience to provide a superior venture capital product to its investors.
Indiana Business Journal
IBJ Staff
Indianapolis-based ExactTarget Inc. announced today that it has signed a $70 million financing deal with three venture capital firms.
Led by Boston-based Battery Ventures, the VC infusion includes investments from Silicon Valley's Scale Venture Partners and Baltimore's Montagu Newhall Associations.
The $70 million is equal to the amount the e-mail marketing services firm sought to raise in its December 2007 application for an initial public offering. The company since has delayed plans to list its stock on the NASDAQ composite index under the symbol EXTG.
The funding will help ExactTarget expand both here and abroad, CEO Scott Dorsey said. It announced yesterday that it added more than 250 new clients and increased revenue in the first quarter by more than 40 percent compared with the same time a year ago. It did not provide exact figures.
"We have posted three consecutive years of profitability and continued quarter-on-quarter growth with the addition of thousands of new direct clients, but we know a significant amount of market opportunity remains both domestically and internationally," Dorsey said in a written statement.
ExactTarget plans to announce the location of its first international office within the next 30 days, the company said.
Indiana Business Journal
IBJ Staff
Los Altos, CA April 23, 2009— New study results show more than one-third of all California small business owners took out risky or toxic mortgages such as Alt-A, Alt-A ARMs, Option ARMs, Interest-Only, and Subprime, etc. to get cash for business expenses during the peak of their home values from 2004 to 2007. As the first wave of mortgage resets hit, small business owners will be at-risk of "payment shock" and default as their monthly mortgage payments skyrocket. The toxic mortgage resets began in the 4th Quarter 2008 and will continue through 2012. "The resulting defaults will be the cause of the 2nd "Tsunami" Wave of Foreclosures that will dwarf the subprime crisis and will take many homeowners and small business owners by surprise. In California, these inflated mortgage payments will threaten more than 2.1 million small business jobs," said Prof. Samuel D. Bornstein.
The California Small Business Toxic Mortgage Survey is the first to provide compelling evidence of California's small business involvement in the toxic mortgage crisis, foreclosures, and job loss. The survey was created and analyzed by Prof. Samuel D. Bornstein and Jung I. Song of Bornstein & Song, CPAs & Consultants, as part of their small business research which they have been conducting since 2000.
MerchantCircle was selected by Prof. Bornstein & Jung I. Song, CPA to run this survey. MerchantCircle comprises the largest number of small business owners in the US with more than 750,000 members. Its membership provides a legitimate sample of the nation's small business owner community.
"I purchased my home in 1999 for 235K," says Keith Capsuto, owner KC Photography & Music in Oxnard, CA. "Within the first 3 yrs. it had a value of $650K. I did the foolish thing of buying the home with an ARM loan to save money for business expenses. Up to the turnaround in the real estate market, I had been doing a fair amount of business, but it dwindled off sharply and by 2008, I was almost bankrupt. Now in 2009, business is about gone! I am 8 months behind on my mortgage with credit cards up to the hilt from business expenses. I am attempting to work with my mortgage company and on the brink of filing for bankruptcy.
This survey confirms Prof. Bornstein and Jung I. Song, CPA's research and highlights the fact that "small business holds the key to a solution of this crisis and must be addressed in order to mitigate the nation's foreclosures and job loss." The survey determined that a significant number of California small business owners are at-risk of losing their homes to foreclosure and their businesses to failure at the resetting of their toxic mortgages. "The resulting job loss will contribute to California's spiking unemployment and cause further financial distress to California's economy," according to Prof. Samuel D. Bornstein.
"Small business owners are the key to our nation's future success – as they create roughly 2/3 of all new American jobs," says Darren Waddell, Vice President of MerchantCircle. "With the nation's largest small business membership base, it's very important that we work to highlight issues that they face collectively as a group and bring it to the attention of our elected officials."
Survey Highlights:
"It is a tragedy when an individual borrower defaults on the mortgage and loses his/her home. The tragedy is magnified when the borrower is a small business owner employing from 1 to 21+ employees. The loss of jobs related to mortgage default and the resulting business failure will further weaken our economy and prolong the recession," said Prof. Samuel D. Bornstein.
- 34.9 % (1,173,900* At-Risk) CA Small Business Owners used risky or Toxic Mortgages or refinancing to get cash for business expenses. These mortgages are at-risk of default at reset.
- 29.9 % (1,005,700* At-Risk) CA Small Business Owners are "very worried" about their monthly mortgage payment due at reset. They are at-risk of "Payment Shock".
Estimated Job Loss for CA Small Business Owners Who are "Very Worried" (2009 to 2012)
- Low 2,100,500
- High 3,272,300+
- 28.7 % (965,300* At-Risk) CA Small Business Owners are At-Risk of "Payment Shock". They do not know the monthly mortgage payment that they will be required to pay at reset.
- 17.9 % (602,100* are at Immediate Risk of Default) CA Small Business Owners are delinquent, having missed 1 to 3 or more monthly mortgage payments at this date. More delinquencies are expected in the upcoming resets in 2009 to 2012.
Estimated Job Loss for CA Small Business Owners Who are Now Delinquent
- Low 1,461,400
- High 2,582,500+
* Based upon 3,363,476 CA Small Business Owners, according to 2007 report prepared for the Small Business Administration's office of Advocacy.
ABOUT MERCHANTCIRCLE
Founded in 2005, MerchantCircle is the largest social network of local business owners in the nation, combining social networking features with a customizable web listing that allows local merchants to attract new customers. More than 15 million MerchantCircle business listings across the country are easily accessed on major search engines.
Currently, over 670,000 merchants on the MerchantCircle network upload pictures, blog, create coupons and newsletters, and connect with other merchants. In addition to its free services, MerchantCircle offers a portfolio of online advertising services including Search Engine Marketing, Website Directory Submission, Web Content Creation, Instant Website Development and Business Verification Services.
MerchantCircle is located on Main St. in downtown Los Altos, Calif., and is funded by Rustic Canyon Partners, Scale Venture Partners, Disney's Steamboat Ventures, and IAC. Learn more at www.merchantcircle.com.
peHub
ExactTarget, an Indianapolis-based maker of email marketing software, has raised $70 million in new VC funding. Battery Ventures led the round, and was joined by Scale Venture Partners and return backer Montagu Newhall. The release does not mention Insight Venture Partners, which held a 35% stake in ExactTarget. In related news, ExactTarget also withdrew registration for an IPO.