SUNNYVALE, Calif. – B is the loneliness round for a young company seeking capital, says Bob Marshall, founding principal of Selby Ventures, because it usually means the start-up is pre-revenue. These days, venture capitalists must truly believe in a business model to pony up.
In the case of Blue Pumpkin Software, that was precisely the case, as the enterprise software company secured $19.2 million senior mezzanine round of financing.
“They have great technology, 60% market share in a relatively few years against much stiffer competition, great distribution with direct sales, distribution sales and OEM relationships, and they’ve balanced that really well,” Marshall said.
“They are well positioned to add to the product line, with a very strong management team that can execute. The company is in a space that is growing. It’s almost recession-proof. The ROI on the investment is relatively short-term, and their benefits are measurable.”
J. & W. Seligman & Co. led the oversubscribed round, with investments from CE Unterberg Towbin, Needham Capital Partners and Liberty View Equity Partners and previous investors Siemens Mustang Ventures, Brentwood Venture Capital, Dain Rauscher Wessels and Van Wagoner Capital Management and Selby Ventures.
“Blue Pumpkin is unusual in that they have what we look for in companies: a very compelling ROI for their customers,” said Tom Hirschfeld a managing director J. & W. Seligman. “It helps [Blue Pumpkin] sell in a difficult environment. They’re still growing strongly, while others are flat or shrinking in their revenues. Those were two refreshing differences.”
Hirschfeld said he was impressed early on by the Blue Pumpkin senior management team led by Doron Aspitz, the chief executive officer.
“The first thing we look at is the management team, and they showed great vision,” Hirschfeld said. Follow up talks with the company’s customers confirmed their beliefs that this was a winner.
“The value-proposition is what sold us,” Hirschfeld added. “The new enterprise category made a lot of the investors excited. I was actually pitching to [Blue Pumpkin] how key this market space was going to be.”
Aspitz said raising the funds in a tough economy “is a strong testament to investor confidence in our execution, strategy and long term future vision. We got a lot more than we were looking for, which is fine with us. You can never have too much money in this environment. [Investors] are not making quick decisions on funding. You have to stand out in this environment.”
Blue Pumpkin sees itself as being at the forefront in enterprise software applications and services for businesses that want to achieve higher levels of employee and customer satisfaction. Blue Pumpkin’s multi-channel workforce optimization software helps businesses plan, execute and evaluate strategies that focus on the quality of personal interactions. Blue Pumpkin’s customers include Apple Computer, Airborne Express, AOL/CompuServe Europe, AT&T, KitchenAid, TimeWarner Cable and Verizon.
SGI Inc. announced last month that Blue Pumpkin’s workforce software helped result in a 37% increase in agent productivity. SGI said the software provided a much more accurate method for accommodating the complexities of four time zones into a centralized schedule.
Aspitz said Blue Pumpkin intends to be profitable by year end. “We want to sustain our growth, be profitable, and maintain our value, that’s the goal,” he said. “We’ll take it from there. If the markets are open, great. If not, we can’t worry about that.”