Software visualization company iRise Inc. said Tuesday, march 4, it has closed on $20 million in new funding as it seeks to expand its customer base beyond Fortune 500 companies to midmarket companies and government entities.
The Series C round included existing investor Morgan Stanley Venture Partners of Menlo Park, Calif., and newcomers Gold Hill Capital of San Jose, Calif., Germany's Deutsche Bank and SVB Silicon Valley Bank of Santa Clara, Calif. The financing consisted primarily of equity and included a small portion of debt, said iRise chief marketing officer Mitch Bishop.
Based in El Segundo, Calif., iRise has raised a total of $46.8 million in outside funding. The company's last investment round came in December 2005, when it secured $15.8 million, following on $13 million in first-round funding from over 100 individual investors raised just after the technology bust eight years ago.
"Our first round of funding was in 2001 and 2002, which was a pretty dismal time to try and raise money, so we went the private investor route, which had a lot of advantages for us," Bishop said.
IRise's simulation software, which combines elements of design, evaluation, demonstration and testing applications, aims to enhance communications between software programmers and corporate executives and other business staff who lack coding expertise. The company was founded in 1996 as IntraSolv, a Web application consultant, realigning its focus in 2001 to focus on software visualization products. IRise raised funding from individual investors in order to build its first product and assemble a marketing team, and launched its first-generation product in 2002.
Since then, the company has expanded rapidly, Bishop said. Revenue "has been 80% compounded annually every year since 2002," he said. iRise was briefly profitable in late 2004 when it raised its first institutional money, but has since gone back into the red in order to fuel growth. Bishop said the company expects to reach sustainable profitability in 2009.
The new capital will allow iRise to enter new market segments and further develop its products and services. As part of it expansion plan, the company will seek to expand overseas and win work from U.S. government agencies.
"Traditionally we've been focused on the largest of companies," Bishop said. "We're expanding our sales organization to have better coverage with the Fortune 500, as well as to start looking at other market possibilities with smaller companies."
The executive would not comment on whether iRise is planning an initial public offering or otherwise considering its exit alternatives, saying only that it eventually wants to operate as a "very large public" software company.
- George White
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