| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
Pricing software developer SignalDemand Inc. announced Wednesday that it closed a $20 million funding round to support expansion of its hosted products for margin optimization to new markets. The San Francisco company brought in InterWest Partners of Menlo Park, Calif., as lead investor in the deal, joined by previous investors General Catalyst Partners of Cambridge, Mass., Catamount Ventures and Hummer Winblad Venture Partners, both of San Francisco, to bring total investment to $30.5 million. SignalDemand founder Michael Neal said the new round will take the company to profitability, though he would not say when, and enable it to expand beyond its food industry focus into several new markets along the way. "We didn't need to raise this money, but we have always wanted to have as a core competency the ability to go from one vertical market to another, and though we have nothing specific to announce, the next markets are in chemicals and pulp and paper," Neal said. "In the long term, we have internal plans to go well beyond these markets." Neal started SignalDemand after having previously founded successful supply- and demand-chain software developers DemandTec Inc. of San Carlos, Calif., now a publicly traded company. SignalDemand was aimed at providing software that uses company-specific and industrywide historical pricing data to develop strategies for purchasing and sales pricing in volatile markets. SignalDemand started out in the meat industry before moving to the general food service market, and its products help companies establish nonfinancial-instrument hedging strategies using delivery contracts for both buying and selling raw materials and finished products. SignalDemand has sold its products through a software-as-a-service model from its inception. Neal said SignalDemand's products are potentially useful to companies in markets with stable input prices, but are particularly valuable in volatile commodity markets, which have become more so in recent years with increased trading in goods by hedge funds and other nonindustry speculators. The company's software allows customers to develop widely varying strategies in purchasing and selling goods in long-term, short-term and spot markets, and customers include food industry leaders such as Cargill Inc. of Wayzata, Minn., Farmland Foods Inc. of Kansas City, Mo., Hormel Foods Corp. of Austin, Minn., National Frozen Foods Corp. of Seattle, Rich Products Corp. of Buffalo, N.Y., and Ventura Foods LLC of Brea, Calif. From the beginning, the architecture of the company's technology was built to be applicable across multiple industries, Neal said. He specifically targeted investors in the current round that could help it move into new markets, he added. The round drew multiple term sheets at what Neal characterized as large multiples of SignalDemand's $7.5 million Series B round of August 2006, but he specifically spurned offers from hedge funds. "We were looking for very specific experience, and this is very smart money," Neal said. "A lot of what we do is helping companies through increasing volatility caused by hedge funds, so it would have been ironic to take their money." InterWest Partners' Bruce Cleveland said he initially looked at the company when it was raising its B round, but sat out to see if SignalDemand could segue successfully from a single market in protein (which is food industry jargon for the meat industry) to broader food markets. "We wanted to see if they could make the transition using the main software engine they had developed to go from protein into another vertical market, which they obviously were able to do," Cleveland said. "With this horizontal engine they have an opportunity to apply their software to multiple markets." SignalDemand used no outside financial adviser in assembling the new round. It received legal counsel from Robert Gunderson of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP in Menlo Park. Ralph Arnheim of Perkins Coie LLP in Menlo Park represented investors. -- Clifford Carlsen
 Deal Video
    Community
 Elsewhere on The Deal.comDealwatch
The Deal MagazineCorporate Dealmaker
The Deal VideoCategories
Blog roll
Archives
| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
