Just as social networking giant MySpace Inc. gained its initial traction with musicians, do-it-yourself widget developer Sprout has looked to the music community for early adopters. The company revealed a $5 million round of funding Tuesday, with first-time investor Polaris Venture Partners leading the investment. Lotus Development Corp. founder Mitch Kapor also invested for the first time, while first-round participant Global Venture Capital, a Tokyo-based firm, followed on its earlier funding.
Founded by the same team that created fundraising widget ChipIn (and still technically part of ChipIn Inc.), Sprout distributes tools that enable individuals or organizations to create rich-media content that can be syndicated across social networks, blogs and other Web sites. The widget medium is especially useful for distributing music, and Sprout CEO Carnet Williams says labels and musicians -- especially the eight million bands with MySpace pages -- are ideal Sprout customers.
Williams says Sprout will always offer a free model that won't include advertising. The company will offer paid subscription services to content creators and promoters such as advertising agencies, and provide white-label services to media organizations as well.
Williams says Polaris' previous investments in blog tool creator Automattic Inc., entertainment site operator Heavy Corp. and humor content provider JibJab Media Inc. were a major influence on Sprout's decision to choose the firm as an investor. He stresses that Sprout wasn't yet strapped for cash, and still had a significant amount of its $3.5 million first round, closed in December 2007, in the till. The company's valuation rose between the two rounds, but Williams declined to give further details.
Although the current funding is designed to spur Sprout to positive cash flow, Williams says the company is considering an international expansion and other initiatives that could require a third round. In the meantime, it will invest in its engineering team as well as marketing programs. - Paul Bonanos
See May 13 blog post on funding from Sprout
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