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Tracking venture capital, IPOs, corporate investment, and R&D funding

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New Strategy Helps Dot-Com
A change in approach has one dot-com heading in the right direction. GiftCertificates.com, which sells (what else?) gift certificates online, attracted $21 million in a fifth round of venture financing late last month. Mellon Ventures was the lead investor.

GiftCertificates was a consumer-oriented company until about a year ago. But since changing its focus to business customers, who can use the certificates as employee rewards or incentives for customers to try new products, revenue has soared--to $65 million last year compared with $18 million in 1999. Business customers now account for two-thirds of the company's sales, up from about 15%.

"Whenever anyone hears dot-com, they're skeptical, but when they look at our business, there's not a funky business model behind it. We buy the gift certificates from merchants at a discount and sell them at face value," says CEO Michael Ahern, who predicts an operating profit by year's end. Most of the 700 online and brick-and-mortar retailers whose certificates are sold on the site give the company a discount of 15% to 20%.

With the fresh cash, GiftCertificates will improve its business and consumer customer service alike, with better reminders for gift occasions, among other things.

--Christopher T. Heun ([email protected])


Storability's Lightweight Take Endorsed By Investors
Some storage service providers invest lots of money building and maintaining elaborate data storage infrastructures and rent space on them to customers, whose storage they also manage.

But it's turning out that nearly all IT executives want their all-important data residing within their own walls. That helped Storability get $30 million in second-round funding last week from Technology Partners and Sprout Group, among others. Storability handles only the management of data storage, while using the customer's own infrastructure. The company remotely monitors devices and restarts them and protects data when an outage occurs.

Storability got the cash because it's demonstrated the most capital-efficient model in the industry, says Jason Yotopoulos, a partner at Technology Partners. He also says that storage service providers handle a pivotal job for IT executives. "When the data's available all the time because the storage stays up and running, they're invisible," Yotopoulos says. "The day the data dies because the storage couldn't recover from an outage, they get fired."

--Martin J. Garvey ([email protected])


Web Traffic Cop Gets VC Nod
Sockeye Networks debuted last week with a splash, revealing that it had secured $28 million in first-round venture capital from Baker Capital, Battery Ventures, CSFB Private Equity, and Polaris Ventures.

Sockeye's service uses real-time data on Internet performance to help Internet service providers and companies achieve maximum efficiency by intelligently routing their Web traffic. Inefficient routing occurs because the Web consists of thousands of networks, all of which have bottlenecks.

Sockeye's managed service uses real-time Internet traffic data from Akamai Technologies, which owns 40% of Sockeye and developed its underlying technology. Sockeye supplements the Akamai data with more detailed data of its own and delivers up-to-the-minute reports on Web performance to an appliance in a customer's network. The appliance suggests changes in routing or makes them on its own.

"The problem we're trying to address is very real," says Steve Bielagus, VP of engineering and operations at Sockeye. So far, it has one paying customer, Focal Data Communications.

--John Rendleman ([email protected])


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