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Carrier Messaging Vendor Bizanga Gets $8M Venture Funding

Bizanga makes highly scalable email management software that it sells to large telcos and other service providers. On February 17, 2009, it announced it had raised new equity funding of $8M.

Products and Competitors:

  • Sells email processing software to large telcos and messaging services providers.
  • Highly scalable, runs on loosely linked commodity PCs, works with a variety of third-party products to address such issues as spam and virus control, encryption, and archiving.
  • Main competitors are IronPort, Message Systems, and Openwave. Critical Path and Mirapoint are secondary competitors.
  • Acquired its first customer in November 2004; first U.S. customer, Cox Communications, a year later.

Trading Performance:

  • Company has healthy growth and has consistently operated at close to breakeven.

Funding History and Transaction Summary:

  • 2003: Founders provide $1 million.
  • 6/2006: 1 million euros/$1.5 million from Galileo Partners.
  • 12/2008: $8 million from Credit Agricole Private Equity, Galileo Partners.

Investor Interest and Motivations:

  • Company’s success with Tier 1 service providers, such as Comcast and Telefonica, in North America and Europe.
  • Caliber of Bizanga’s management team.

CEO Jerome Lecat’s advice to other fund-seekers in today’s climate is:

  • Funding marketplace will take a long time to revert to normal, probably not until late 2010.
  • Most U.S. funds are now investing only in their portfolio companies and early-stage ventures. European funds are more likely to invest in mid-stage companies.
  • Valuations are down. Had the round closed in June rather than December 2008, the valuation would have been 20% higher. Given that Bizanga is growing quickly, this may translate to Series B and C valuations being down 50% on six months to a year ago.
  • Series A funding valuations may be more or less unaffected, since investors recognize that the entrepreneur has to be properly motivated.
  • It appears that valuations are down less in Europe than in the United States: perhaps 20% down in Europe, compared with 50% down in the United States.
  • If at all possible, show a business that is profitable or that can be profitable if management chooses.
  • Expect the funding process to take at least six months.
  • Don’t be too greedy with valuations.
  • Look to your earlier investors as a very good source for additional funding.

David Ferris

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