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Indian software-as-a-service developer Gridstone Research announced Thursday that it raised $10 million in a Series B round to support expansion and marketing of a product that gathers and delivers detailed data and guidance on thousands of public companies. The round was led by Helion Venture Partners of Bangalore, India, along with other previous investors Charles River Ventures of Boston and Maverick Capital Ltd. of San Francisco, and brings total investment in the three-year-old company to more than $18 million. The new funding will enable Gridstone, which has a U.S. headquarters in San Mateo, Calif., and all its operations in Bangalore, to continue expansion of a product that currently provides financial analysts with information on more than 1,000 global companies. Gridstone CFO Sandeep Shroff said the company was founded in August 2005 and raised an undisclosed amount of Series A financing in March 2006 before launching its initial product early last year. Gridstone was formed by veterans of Indian outsourcing giant Infosys Technologies Ltd. One goal was to take advantage of relatively inexpensive talent in the country to provide technology primarily to U.S. customers, but it was positioned from the beginning to focus on products rather than services. "The whole premise was to build it once and sell it multiple times," Shroff said. "No one has proprietary rights to any information, and we are a research product, not a research service." Shroff said that as general manager of investor relations at Infosys, he was in charge of representing the company to Wall Street analysts, and he frequently encountered investors who didn't have easily accessible company details. While services including those provided by Bloomberg LP and Securities Data Publishing offer all the traditional financial information available in public filings, Gridstone's proprietary software was developed to extract detailed financial and operational data from all company sources, including earnings call transcripts, and to identify key text references from company guidance. Izhar Armony, a general partner with Charles River, said the company's technology is fully automated, but has a large human component in providing quality control and identifying particularly important information not tied to financial reporting. The system mines unstructured company documents for operational information, such as numbers of units sold of particular products; it also conducts detailed cost analysis to help financial analysts spot trends in strengths and weaknesses. In the year since it launched, Gridstone has landed customers including AllianceBernstein LP, Oppenheimer Funds Inc. and Nomura Asset Management. Gridstone continually adds companies to its coverage, and initiates coverage of specific companies when clients request it. Shroff emphasized that this simply adds to the overall product, but does not customize reports for individual customers. Shroff said Gridstone decided early on to keep the current round among insiders, and while he declined to disclose a valuation for the deal, he said it came at a sizeable increase to its first round. He added that increasing Helion's small investment in the first round will provide strategic advantages to the company's operations in India. "Helion is a fund that was just formed in early 2006 by successful serial entrepreneurs in India, and it is focused purely on investing in Indian companies, so this gives us a good vibe in India from a recruitment perspective," Shroff said. Helion had not previously taken a board seat, but partner Ashish Gupta will come on as a director with the new investment. Armony said the firm's increased involvement would be a boon as Gridstone expands. Gridstone did not use an outside financial adviser in putting the new round together, and received legal counsel on the deal from Ivan Gaviria of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP in Menlo Park, Calif. Investors were represented by Craig Jacoby of Cooley Godward Kronish LLP. -- Clifford Carlsen
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