First Round Deal Nets Jamcracker $42M

Exodus Communications took its next evolutionary step recently when company founder K.B. Chandrasekhar closed the first round of private financing for Jamcracker Inc., which he founded last year, at $42 million in equity and debt.

Internet Capital Group and Fleet Equity Partners were the co-leads on the equity tranche, which totaled $30 million, Chandrasekhar said. Additional equity commitments came from First Analysis Venture Capital, executives at Kohlberg Kravis Roberts & Co., Gabriel Venture Partners, a venture investor in Exodus, angel investors and management.

Chandrasekhar said the debt tranche, which totaled $12 million in an equipment financing line, came from Meier Mitchell & Co., Western Technology Investment and Silicon Valley Bank.

Based on the application service provider model, Jamcracker intends to provide customers with a single IT platform for midsize companies – between 100 and 1,000 people Chandrasekhar said. The company will monitor, manage and support service-level agreements for multiple vendors, giving customers a single contact for all IT needs.

“This is a tool to enable IT managers, allowing a huge advantage in time to market by focusing on core competencies,” Chandrasekhar said.

Jamcracker has slated proceeds from the financing for three areas. First will be development of the platform product, which will aggregate all the IT services into one consistent area. Secondary proceeds will be spent on expanding the technology infrastructure so the service can meet Chandrasekhar’s plan of “always-on” service. Thirdly, money will be utilized to develop an enterprise support center and automated service centers.

The Second Exodus

Chandrasekhar said he chose to launch this initiative outside of Exodus for two primary reasons: so that the concept would receive the full attention of the company, rather than being a portion of Exodus; and, considering Exodus already runs ASPs, so the separation would be beneficial.

While the company completed a large first round, Chandrasekhar said it would be back to the private market as soon as the middle of this year. Although he didn’t state how much the firm would look to raise, he did say the next round would consist of equity and debt.

“I am a big fan of combining the two, so I’m not afraid to leverage the company a little bit,” he said.