Duane Weeks vividly recalls those frustrating days last summer when his frequent trips up Sand Hill Road in pursuit of capital were proving fruitless. On one such trip the Exemplary Software CEO noticed what appeared to be an entrepreneur near the intersection of Interstate 280 holding a tin cup and wearing a placard that read: “Will work for venture capital.”
“People were blowing their horns as they went by, sort of waving and laughing,” Weeks says. “When I was done [seeking funding], I kind of felt like that guy.”
Six months and $12 million later Weeks can afford to laugh. The Series C financing came in two tranches with Clearstone Venture Partners, who led the round, putting in $4 million last fall and Woodside Fund adding $4 million more in February. Previous investors came up with the last third of the money on a pro rata basis with both Clearstone and Woodside taking seats on the Exemplary board of directors.
Despite closing the Series C round undersubscribed, Weeks says the funds would carry the Cupertino, Calif.-based company to profitability. He predicts Exemplary will be cash flow positive by mid-2002. Exemplary hopes to jump-start a sales and marketing campaign with the new money. According to Weeks, the product will save businesses money, something he anticipates will catch the ear of CFOs and operations chiefs in this tough economy.
Exemplary’s software automates and accelerates information exchange along the supply chain
Investors believe the supply-chain space to be an explosive and competitive market and that the wealth of experience in supply-chain solutions among Exemplary’ s management sets them apart. Erik Lassila, managing director at Clearstone and Exemplary board member, said that his firm had been watching the market for more than a year but wanted to make sure they were looking at a market leader before committing funds. Lassila added that Exemplary was in a difficult place last year. With product just starting to ship and VCs on the defensive, Weeks couldn’t point to significant past revenue to instill confidence. “But this company really jelled and grew its customer base rapidly toward the end of last year,” Lassila said.
Exemplary spun out of HP Labs in 1998 and has now taken in about $24 million. The initial financing of $4 million was led by Lightspeed Venture Partners (formerly Weiss, Peck & Greer Venture Partners). Series B was led by JT Venture Partners and yielded $8 million.