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11/30/2010
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Yammer Raises $25M For Enterprise Social Networking

With the market for collaboration and social technologies in companies heating up, the social network will use the third round funding to triple its engineering team and increase sales operations.

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Top 20 Apps For Managing Social Media

Yammer, a Facebook-like social network for the enterprise, has received $25 million in third-round funding, an indication of the growing demand for collaboration and social technologies in large companies.

The latest round of funding, led by U.S. Venture Partners, brings the San Francisco company's total financing to $40 million. Yammer's previous investors, including Emergence Capital, Charles River Ventures and Founders Fund, also contributed to the latest round.

Founded in 2008, Yammer started off as a micro-blogging site for corporate employees. In September, the company redesigned its service to become a full-fledged social network. Yammer today has more than 90,000 companies in 136 countries using its service, including more than 80% of the Fortune 500. In July, the company announced that it had reached more than 1 million corporate users, and currently has more than 1.5 million.

Yammer plans to use the new funding to scale its operations triple its engineering team and significantly increase its sales operation. The money will also be used to open offices in Europe and Australia.

"The consumerization of the enterprise is happening in a big way and Yammer sits right in the middle of this major trend," Mamoon Hamid, principal at U.S. Venture Partners, said in a statement.

Indeed, Forrester Research has identified collaboration and social networking for the enterprise as one of the hottest current technologies. In a 2009 survey of businesses using enterprise software, the research firm found that on a scale of 1 to 5, with 5 being the most important, 58% of the survey respondents rated collaboration technologies as a four or five in terms of helping to meet their companies' current business goals.

In the post-recession era, firms are betting on knowledge workers to drive competitive differentiation in the same way that IT drove efficiency in the early to mid-90s, Forrester analyst Rob Koplowitz says in his blog. "The trend is particularly strong in North America and Western Europe where big bets are being made on innovation, design and other differentiation that will derive from more efficient, better connected knowledge workers."

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