Spigit wants $4M more for corporate social networks

August 7, 2009 | Camille Ricketts | Comments | |

Spigit, builder of internal social networks for large companies, is looking to raise $4 million in new capital even though it has been turning a profit for the last eight months, according to VentureWire. Based in Pleasanton, Calif., the company has set up networks for more than 100 companies, including Pfizer and Southwest Airlines.

Spigit’s finished products look less like Facebook than webs of wikis, message boards and the like that employees can use to communicate, brainstorm and preserve institutional knowledge. Uniquely, it bakes in an algorithm that helps employees find the best person or resource within a company to answer their questions.

Spigit has already raised more than $4 million — $1 million from family and friends in 2006 and $4 million from Pico Holdings (representing a 50 percent stake for the firm). Pico subsequently provided another undisclosed amount.

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Camille is the lead writer for GreenBeat. She came to VentureBeat from Google where she worked on its traditional platforms team, particularly in TV. Before that, she was a reporter for the Wall Street Journal in New York and London. Follow her on Twitter at @camillericketts, and follow VentureBeat on Twitter at @venturebeat.

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  • vincentcarbone
    Another more establishing players in the market include: Brightidea Inc. www.brightidea.com , Imaginatik www.imagnatik.com

    Example of Brightidea System: ideas.acrobat.com
  • As the CEO of one of the companies in the same market place, this must count as one of the weirdest PR annoucements. I can see announcing a successful completion of a money raise... But seriously, saying that you'd like some more money, please?? How about asking for a new Blue-Ray player, an HD TV set, and a boat while you're at it.

    I would imagine their advisory board would have advised against it. You become a hostage to fortune (what if you only get $1m and you said you wanted $4m). You announce your activities to potential competitors. You highlight potential financial weakness to your clients - and staff - who might question your ability to be viaable (BTW being 'profitable on a monthly basis' is not the same thing as being profitable - CFOs know this, as do banks who lend money).

    There was word in the industry that they had already done a deal back at in July (I had people who met the Spigit folks at conferences, who implied that they had already closed a round). So obviously that rumor has been disproven.

    And then I would be very interested to see what kind of valuatoin they might creep towards. Already based on the Pico $4m, this would be a $4m pre, $8m post beforehand from the ;last round. I'd reckon Spigit might be on $1.3M - $1.7M revenue, loss making for the full year.

    Imaginatik (my firm) just raised $2.5M at a $15M pre valuation. And we're on approx $10M revenue and profitable. I would imagine sane investors will do some due diligence and see that valuation the lear is at, with most recent pricing, and price any hopeful $4M raise for Spigit in this light. Sounds like a down round, maybe $4M buys another 50% of the firm, should easily be more.

    And, just as a reference point, this logic would go for the other micro-vendors in this space (and BTW I believe that Imaginatik is bigger than micro, still climbing but still not at the right scale - the new investment does help). If Brihtideas was say, at $2.2M revenue (booked, not forecast - too much economic uncertainty), at about break-even, that would not be worth the multiple $Ms that might be hoped for. Investors need some form of reality in this investment market and economic climate.

    K - just some thoughts. And yes, they will be biased - I am the CEO of Imaginatik plc after all :)

    Mark Turrell
    CEO, Imaginatik plc
    www.imaginatik.com
  • Hutch Carpenter
    Hey Mark -

    Thanks for taking an interest in our business. We will have to add you to our quarterly financial meetings!

    As the article notes, Spigit is running in the black, thanks to closing a number of deals with Fortune 2000 enterprises. Spigit's SaaS innovation management platform integrates emergent social collaboration with traditional workflow and analytics in innovation communities. It's that combination of Enterprise 2.0 with traditional aspects of enterprise software and internal processes that's resonating with leading companies.


    Thanks,

    Hutch Carpenter
    Director of Marketing
    Spigit