Financing Winners Like NewsGator

Last week NewsGator announced that it had raised a $12m round led by new investor Vista Ventures and existing investors Mobius Venture Capital and Masthead.  Greg Reinacker – NewsGator’s founder / CTO reflected on the progress from the first $1m investment that Mobius made and Jeff Nolan’s talked about our excitement of getting Lisa Reeves (formerly from SAP Ventures – now at Vista) involved.

I’ve been an investor (via Mobius Venture Capital) from the very beginning of NewsGator.  I wrote a post titled Why Did We Invest in NewsGator? in June 2004 shortly after making a $1m seed investment in the company (mostly in Greg Reinacker and his vision.)  Reading back through it makes me feel simultaneously nostalgic and intensely proud of what the now 75+ people at NewsGator have accomplished.

NewsGator has a variety of products built on top of the RSS platform technology they have created.  We’ve seen great adoption of the NewsGator Enterprise Server (over 100 of the Fortune 2000 are now customers), are seeing rapid growth in our new NewsGator Social Sites product (integration of NewsGator Enterprise Server with Microsoft SharePoint Server 2007), and have been blown away by the market success of the NewsGator Widget Framework (over 50 customers added in 2007.)

We took a "go heavy on building the technology" approach at NewsGator and it has paid off nicely.  The expertise within the company around RSS technology is humongous.  We’ve started (but have not limited ourselves to) a Microsoft view of the enterprise and as a result have extremely deep links into SharePoint, Exchange, and Active Directory (along with some of the best Microsoft .NET developers on the front range.)  And we’ve been able to attract incredible product talent to the team which has resulted in an awesome portfolio of integrated products on various platforms including Windows (FeedDemon), the Mac (NetNewsWire), Outlook, and Mobile (name a platform, we’ve got it.)

Lisa Reeves – who comes from the world of enterprise software – understands the potential of a company like NewsGator.  In a universe where many VCs are saying things like "we are only interested in consumer Internet" or "we only want to fund companies with a pure SaaS model", Lisa saw past the nonsense of such limiting thinking and focused on the potential of the overall business.

As a huge believer that the consumer Internet innovations that we’ve seen take front and center stage over the past few years are now ripe for application to the enterprise, I’m rabidly excited about the prospects for NewsGator.

  • http://www.dotavery.com/blog James Avery

    All the questions I want to ask but probably won't get an answer to: :)

    What is the goal with this new round of financing? Is it to mainly keep the company afloat or to invest in developing a new product/technology? Is Newsgator profitable?

    • http://www.feld.com Brad Feld

      Goal: Expand the sales and marketing team and fund the company through becoming cash flow positive and self-sustaining. We'll continue to aggressively develop new products and expand our existing products, although much of our incremental investment at this point is going into sales and marketing.

      NewsGator – like many other three year old startups that are growing quickly – is not yet profitable. In our experience, a company growing at the rate that NewsGator is growing usually takes about $25m – $35m of invested capital to become cash flow positive. While you can do it for less, the tradeoff is rate of growth and market position. NewsGator is the market leader in enterprise RSS related products – we intend to use this financing to extend our dominant position while creating a profitable standalone company.

      • http://www.dotavery.com/blog James Avery

        Awesome, I love to learn and hear what is going on. I wasn't trying to be rude by saying they wouldn't get answered, I just figured you couldn't release the information publicly.

  • Sameer

    Newsgator is in a very good position given whats on the horizon for enterprises. I've heard it from customers. All the best to them.

  • http://www.conversationware.co.uk Matt Lambert

    Congratulations.

    You posted this on the 10th anniversary of the first use of the word weblog. Quite a thing.

    I saw the demo about a year ago, awesome product even at that point

  • curmudgeonly troll

    dang, that's some impressive purple prose. I shall immediately commence rewriting my business plan in ths style.

    yours sedulously eschewing obfuscatory prolixity,

    • http://www.feld.com Brad Feld

      I've been practicing my writing skills.

  • James Avery

    All the questions I want to ask but probably won't get an answer to: :)

    What is the goal with this new round of financing? Is it to mainly keep the company afloat or to invest in developing a new product/technology? Is Newsgator profitable?

  • http://intensedebate.com/people/sameer3557 sameer3557

    Newsgator is in a very good position given whats on the horizon for enterprises. I've heard it from customers. All the best to them.

  • James Avery

    Awesome, I love to learn and hear what is going on. I wasn't trying to be rude by saying they wouldn't get answered, I just figured you couldn't release the information publicly.

  • http://intensedebate.com/people/bfeld bfeld

    Goal: Expand the sales and marketing team and fund the company through becoming cash flow positive and self-sustaining. We'll continue to aggressively develop new products and expand our existing products, although much of our incremental investment at this point is going into sales and marketing.

    NewsGator – like many other three year old startups that are growing quickly – is not yet profitable. In our experience, a company growing at the rate that NewsGator is growing usually takes about $25m – $35m of invested capital to become cash flow positive. While you can do it for less, the tradeoff is rate of growth and market position. NewsGator is the market leader in enterprise RSS related products – we intend to use this financing to extend our dominant position while creating a profitable standalone company.

  • Matt Lambert

    Congratulations.

    You posted this on the 10th anniversary of the first use of the word weblog. Quite a thing.

    I saw the demo about a year ago, awesome product even at that point

  • http://intensedebate.com/people/bfeld bfeld

    I've been practicing my writing skills.

  • curmudgeonly troll

    dang, that's some impressive purple prose. I shall immediately commence rewriting my business plan in ths style.

    yours sedulously eschewing obfuscatory prolixity,