Palo Alto, Calif. – Only a few short weeks after its official founding as a company, Corporate Oxygen defied current market trends and received a quick $2 million in Series A funding. Lead investor, Apax Partners Inc. announced the deal last week.
“Getting funding was the least of my worries. Decide what firm to go with was the hard decision,” said Rajiv Gupta, one of the founders of the nascent web services company. The company decided to go with Apax, because of Gupta’s comfort level with Evangelos Simoudis, the Apax partner who will take a seat on Corporate Oxygen’s board.
“There were some VC firms I rejected early, because I was simply not comfortable with the partner they wanted to put on our board. But Evangelos has really done his homework,” Gupta noted. Another factor in Apax’s favor, were the firm’s deep pockets, as well as its demonstrated ability to take companies through all stages of their development, he added.
For Apax’s part, the firm had been looking for a promising web services company since February of last year, since the firm believes this is an emerging sector, Simoudis said. Currently the web is built around html and for human eyeballs, but as more and more of the interaction that takes place on the web will be between different pieces of software, and web services companies are helping to pioneer that change, he explained.
Apax consulted with several Global 2000 companies and industry analysts to research the space. The firm eventually looked over 50 potential deals and tapped Corporate Oxygen, based largely on strength of its management team, Simoudis said. Gupta, and his co-founders, Shamik Sharma and Sekhar Sarukai had headed up Hewlett-Packard Co.’s web services initiative, E-Speak.
The company will work in the monitoring and management area of the web services sector, Simoudis said. Gupta declined to explain exactly what the company will do, except to say that it is not an exercise in technology, but will leverage technology to solve particular highly focused, highly painful pinpoints faced by companies using web services. “We want to say in stealth mode now for a bit,” he said.
The company’s first priority now is to continue to build out its management team, while Apax will continue to work on additional fund raising for the business, Simoudis said. “We went back and forth about opening up this round to other investors, but I felt strongly about setting the company up right now and letting them get started,” he explained.
However, now that Corporate Oxygen is up and running, Apax may potentially bring other investors into the A-round, perhaps pushing the round up to $6 million to $7 million total, with a co-investor providing about $2 million to $3 million of that capital. The potential co-investors will have to be the right fit for the company and Apax, bringing experience, connections and their own know-how to the group. If that co-investor cannot be found, Apax will simply pony up more funding for the company.
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