Kana Secures $55 Million For The Heck Of ItKana Secures $55 Million For The Heck Of It
It doesn't need the cash, but E-CRM vendor Kana has secured up to $55 million in equity funding "because we could."
November 29, 2001
Talk about rubbing it in. Kana Software Inc. has secured up to $55 million in equity financing that it doesn't even need. The growing provider of electronic customer-relationship management applications said Thursday it had reached an agreement with Technology Crossover Ventures for the venture firm to purchase as much as $45 million of convertible stock, and has issued the firm warrants to purchase 1.9 million shares of Kana's stock.
Additionally, Amerindo Investment Advisors, which already held a substantial position in Kana, agreed to purchase $10 million worth of common stock from the company. The news appeared to fuel confidence in Kana, with the company's share price up 24% Thursday, to $1.34.Kana is preparing to introduce a new version of its external-facing E-CRM app, but VP Lorraine Daignault says the capital infusion won't be needed to cover costs associated with the launch. Rather, she says, "We did it because we could." According to Daignault, company execs figured that securing the funding would serve as a signal of Kana's strength and prevent them from having to justify the company's viability to potential customers.Attracting customers hasn't been a problem for Kana, which offers technology garnered from nearly a dozen acquisitions and mergers; the latest was a merger with Broadbase Software completed in June. The company claims that nearly 1,200 companies are using its E-CRM products, with the most recent customer wins including financial-services giant Credit Suisse Group and pharmaceutical manufacturer Allergan Inc. Thanks to these successes, says Daignault, the company is on pace to break even this quarter.Yankee Group analyst Brian Jones says the funding accomplishes Daignault's stated symbolic goals. "It reflects that this is a company with real customers, revenue, and prospects," says Jones. "Kana at this point has the pieces it needs to offer a broad E-CRM solution." Jones says the company appears to be on solid financial footing, thanks in part to successful cost-cutting efforts that have slashed its staff to about 400 people, down from the 2,000 it employed after it merged with Broadbase. He expects it to see growing competition from Siebel Systems Inc., which is using partnerships and original-equipment-manufacturer relationships to branch out from call-center apps into self-service and online E-CRM offerings.
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