HighWired.com Ventures Beyond Online Classroom

In a move that should help further the creation of a comprehensive community of online secondary schools, HighWired.com recently raised $30 million in its second round of venture capital funding.

Existing backers North Bridge Venture Partners and Charles River Ventures co-led the transaction with investments of $6 million each. The pair had been the sole private equity investors in a $7 million Series A round last July when the issuer was known as HighWired Networks Inc.

In addition to the lead investors, participants in the Series B deal included Broadband Venture Group, Arcadia Partners, Comdisco Ventures, Longworth Venture Partners and Haebler Ventures.

“We thought that this company’s product offering was unusually creative and broad in attacking a very attractive demographic,” said Ed Anderson, managing general partner at North Bridge Venture Partners. “We had never seen a company focusing on [the high school market] before we saw HighWired.com.”

Indeed, it was the issuer’s first- mover advantage in an Internet education marketplace otherwise dominated by K-8 concerns that caused North Bridge to take the relatively unusual step of leading both the Series A and Series B financings. “We only lead two rounds for about 20% of our portfolio companies, but there really weren’t any questions about doing it with this one,” Anderson said.

Headquartered in Watertown, Mass., HighWired.com currently provides over 9,400 high schools with free Web publishing tools primarily designed to aid in putting campus newspapers online. The company’s technology also allows schools to digitize additional information such as academic assignments and school lunch menus.

“When we started writing our business plan in the fall of 1997, we did a search on Yahoo! and found that only 60 or so high schools had the ability to put their newspapers on the Web,” said Matthew Flaherty, co-founder and vice president of business development at HighWired.com. “One of the main problems was that teachers weren’t really proficient with Web technologies, so we’ve come in and really solved the problem for a lot of schools.”

In exchange for its services, HighWired.com receives content syndication rights over all of the materials printed in the online edition of the school newspapers, which it then licenses to both America Online and Lycos. However, it is important to note that the student journalists retain technical ownership rights over their own work.

The company also has a handful of sponsorships and plans to significantly increase its revenues this August when it rolls out an extensive e-commerce program. The new offering will allow visitors to the school sites to purchase advertised items and then donate a portion of the sale price to the school itself. “We always believe in giving something back,” Flaherty said.

HighWired.com does not have any current plans for an additional round of venture funding, although Anderson said that North Bridge would be interested in an additional participation. “We’d be ready, willing and able to continue funding them, but this is a substantial infusion that is intended to carry over into an initial public offering,” he said.

Ted Dintersmith, a principal with Charles River Ventures, echoed Anderson’s sentiments, but added that he expects HighWired.com to raise a relatively large strategic round prior to a public offering, even though it doesn’t necessarily need the additional cash.

“Most of the companies we’ve been working with have raised big accelerated rounds before they went public both so that they have stronger strategic relationships,” he said.