Inxight Grabs $24M Series B Deal

Inxight Software Inc. emerged from stealth mode last week essentially for the first time since being spun out of Xerox Parc in 1997, announcing that it had drawn $24 million worth of fresh venture capital from the private equity well.

This was Inxight?s first publicly announced round of financing. The company had previously been funded solely by Xerox Parc, which has pumped an undisclosed amount of money into the company.

Newcomer DB eVentures led the Series B deal with an $8 million investment, and was brought on board primarily to help Inxight carve inroads in Europe. The all-new VC lineup also included Siemens Business Services, Atila Ventures, Deutsche Bank?s E-millennium 2 fund, BT Investment Partners Inc., GD&C Partners LLC, Sterling Mezzanine Partners LLC and TWB Investments LP. Deutsche Banc Alex. Brown placed the deal.

After trudging through the fund-raising trenches for six months, the company finally decided to call it quits, although it was initially looking for slightly more money, said Inxight CEO Dr. Robert Lee.

“Given the market conditions, we believe that some of the plans that have been put in place by our sales force should be tempered a bit,” he said. “Once we do that, our cash requirements will go down, so it made sense to do a smaller round.”

Although Inxight is slated to become profitable sometime next year, it may seek additional capital before then, particularly if it comes from strategic investors, Lee said. The company may also entertain IPO plans at some point if market conditions improve, he added.

Interestingly, it would seem that Inxight would be remiss in slimming its sales plans prematurely, as it aims to grab a sizeable share of the knowledge management software market, an area IDC predicts could be worth as much as $5.4 billion by 2004.

In fact, a $2.5 million chunk of that market may be within Inxight?s reach by year-end, Lee noted.

Inxight?s flagship product essentially enables corporations to cope with content overload by extracting and boiling down information and summarizing it according to specific criteria. And unlike most Web-based search engines, it doesn?t return thousands of irrelevant hits. It also supports 16 different languages.

“Market research has shown that of the data that?s stored electronically, only 15% is structured, or organized,” Lee said. “That means 85% of the data is unstructured. [That?s why] we think we?re going after a huge market. No one is spared from content overload.”

Information providers like Factiva and CNNfn use Inxight?s software to categorize documents and help people synthesize a plethora of information each day. To date, Inxight has signed on 180 customers.

The company?s nearest competitor is UK-based Autonomy Inc., which allows information to be automatically personalized, organized and delivered to individual users according to their particular needs.

“The opportunity is huge, because so far there is no real competitor on the multi-language field, however,” said Pierre Suhrcke, a managing director with DB eVentures, which is not only an Inxight investor, but also a client. “[The multi-lingual capability] offers them a unique opportunity… It?s exactly what companies looking for a globally applicable tool need.”

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