Biz360 scores $10M

The Deal, May 8, 2008 by Clifford Carlsen

Market research and business analytics software developer Biz360 on Thursday, May 8, unveiled its first publicly announced round in five years, hitting up insiders for $10 million in new funding in a deal expected to fund new business development and take the eight-year-old company to profitability.

Foundation Capital of Menlo Park, Calif., led the round with Granite Ventures of San Francisco and Scale Venture Partners of Foster City, Calif., also signing on for full pro-rata participation in recognition of recent strides the company has made in broadening its product offerings and business model. The deal pre-empts plans to go to new investors later this year, with insiders choosing to increase positions to take advantage of an undisclosed series of investments that have supported the company over the years.

CEO Brad Brodigan said the new funding is the first significant round the company has raised since he joined as Biz360's fourth CEO in October 2006. Brodigan came from Gallup Organization of Washington where he had been steeped in traditional market research methodology and traditions, recognizing an opportunity to direct what he described as the company's strong technology base toward harnessing the power of emerging new media.

Investors committed new money at the time to entice Brodigan to join the company, but he said the new round is a reflection of several new initiatives the company has started under his direction.

"At Gallup I saw that in the traditional market research industry, while some of the methodology had changed, the ways of surveying consumers was much the same," Brodigan said. "I saw the power of the Biz360 model in gathering and translating news content into insight, but while the technology was there, it was being applied just to traditional media."

Early on, Biz360 developed software capable of searching traditional media in several languages for references to brands and products, and applying analytical algorithms to produce actionable business intelligence. The company focused on large customers in industries including financial services, pharmaceuticals, automobiles, consumer electronics and technology, and it was early to adopt a model of selling its software as a service.

But when Brodigan joined the company, he focused on broadening its search and analytics technology from traditional media to peer-to-peer media, user-generated content, consumer product reviews and other emerging forms of social media. Brodigan also redirected its business model to include more customized services.

"When I came in, we were almost too focused on software as a service, because we are selling to marketing departments that are not as accustomed to buying software as IT groups," Brodigan said. "We saw we had the ability to reduce the time-to-value by producing customized reports, and that value can then lead us to traditional relationships."

Brodigan said changes the company have made, and the launch of a new version of its core software applications this June, had been expected to support a new venture round later this year in which the company planned to solicit new investors, but insiders who had backed the company through leaner times opted to pre-empt that effort and give the company greater runway.

"We decided the company was tracking very nicely, so insiders chose to keep their own positions high," said Sharon Weinbar, a managing director with Scale (formerly BofA Venture Partners), which had led Biz360's last publicly announced round in May 2003. She said at that time she saw the opportunity to provide a strong technology platform for producing analytics in a highly fragmented media market, and that the company has built on that over the years.

Brodigan said the new money will enable the company to more aggressively introduce new features, even as it launches the new version of its core platform, and will allow for more aggressive marketing, including the expansion of channel partnerships.

Biz360 used no outside financial adviser for the round. It received legal work on the deal from Marsha Hatch of Heller Ehrman LLP in Menlo Park. Cooley Godward Kronish LLP, also in Menlo Park, represented the investors.