SocialText closes new funding

From Mike Stackpoole at Ferris Research:

On March 31, 2009, collaboration vendor Socialtext closed a new equity fund-raising of $4.5M.

Products, Facilities, and Competitors:

    * Socialtext provides hosted and appliance-based wikis, integrated weblogs, and social networking for workplace communities.
    * The company is especially recognized for pioneering the enterprise wiki technology.
    * The company has around 5,000 customers.
    * Customers include BASF, Boston College, CondeNet, Epitaph Records, IKEA, Intel, MicroStrategy, MWW Group, Nokia, SAP, SunGard, and Symantec.
    * Socialtext is based in Palo Alto, Calif., and also has offices in New York and London.
    * Main competitors are Jive and Atlassian.

Trading Performance:

    * The business was founded in 2002, and has 40 employees.
    * Socialtext revenues are estimated by Ferris Research at $6M-$8M.
    * The company has yet to reach profitability, but it expects to achieve this without further funding.

Funding History: Socialtext has had four funding rounds, with total money raised of $17.5M.

    * 6/2004. $450K from angels and Omidyar Network.
    * 4/2005. $3.1M. First institutional round: Draper Fisher Jurvetson, SAP Ventures, Utah University Venture Fund.
    * 11/2007. $9.5M. Draper Fisher Jurvetson, Omidyar Network, SAP Ventures, Utah University Venture Fund.
    * 03/2009. $4.5M. Draper Fisher Jurvetson, Omidyar Network, Utah University Venture Fund.

This latest funding will be used predominantly for further product development and marketing. The company believes this funding will be sufficient to take it to the cash-flow-positive stage.

Fund-Raising Process. CEO Eugene Lee describes this as:

    * Socialtext V3–a new, expanded offering–appeared to be a good basis for a new round.
    * In May 2008, once a solid demo was in place, fund-raising commenced among the traditional West Coast VC community.
    * V3 shipped in September/October 2008.
    * The launch was coincident with first major stock crash, and much venture spending was suspended.
    * By the end of October, it was clear VC funding would not be forthcoming.
    * Thus Socialtext had to go to its internal investors.
    * Terms agreed in January 2009; closed in February.

Stuart McIntyre is a Senior Strategist at Fostering Community Limited. He curates a number of product-focused news sites, is a lapsed podcaster, founded the Social Connections user group and regularly speaks at conferences and events. This blog represents his own slightly-eccentric and usually-controversial opinions!