E-commerce Enabler RichFX Lands $33M in Fourth Round Funding

On a tour through NeimanMarcus.com, an orange butterfly flies around the screen, through an open doorway into a virtual shoe store. The heels float and spin across the screen – the effects of a video compression technology spun out of an Israeli military unit, RichFX.

Although Neiman Marcus is the first major retailer to employ RichFX’s e-commerce enhancements, the New York-based company last week closed on a $33 million round of private equity financing, its fourth since 1998.

Morgan Stanley Dean Witter led the round alongside Deutsche Bank Alex. Brown, Itochu Capital, Mellon Ventures, Prudential Volpe Technology Group’s Partner Fund, Reicon Capital and Thomas Weisel Partners. RichFX had raised more than $10 million in previous rounds of financing from Coral Ventures, RealNetworks Inc., Polaris Venture Capital and Veritas Venture Capital. Each of the existing investors maintained their pro rate shares in the round.

Not only will RichFX continue to pursue other online retailers with its virtual shopping technology, but it also will work with its existing partners to animate content for any online player, said Harry Plonskier, chief financial officer of RichFX. The company has already secured agreements with streaming media provider RealNetworks, Web developer Digitas and 3-D software developer Discreet, a division of Autodesk. The company is actively pursuing additional strategic relationships.

After years of development, RichFX, a technology that compresses then expands high volumes of data to animate content online without sucking up bandwidth, launched earlier this year.

“We’ve developed a sustainable business model based on recurring streams [of revenue] over the future. The funding will allow us to execute the beginning stages of the plan,” Plonskier said.

Before the company makes any further trips to the private equity market, it will use the current round of funding to enhance and develop its product suite to include more customer interaction and build out a sakes and marketing team.