Kontiki Sets Sail With $16M Series B

Like its namesake, software company Kontiki keeps cruising ahead despite the rough economic seas confronting startups. The Sunnyvale-Calif.-based company closed its second round of funding, banking $16 million to be used for software development, sales and marketing.

The round was split into two tranches, says Kontiki CFO Rob Selvi, the first tranche, which closed in March, was aimed at previous venture capital investors Benchmark Capital and The Barksdale Group. Both re-upped with Benchmark investing proportionally more. The Barksdale Group, the now defunct VC play by Netscape founder Jim Barksdale, is not making new investments but is making follow-on investments.

The second tranche of the Series B was focused on gathering corporate investments, Selvi says, companies that would see Kontiki’s delivery management system software as a complement to their businesses. Both Adobe Ventures and VeriSign Inc. did just that, and became the newest investors in Kontiki.

“Kontiki’s secure delivery software is assuring that Adobe PDF documents are protected against unauthorized use or alteration when distributed electronically,” says Fred Mitchell, vice president of venture development at Adobe. “Our investment in Kontiki reflects our belief that customers want secure, reliable delivery of rich information anywhere, anytime on any device.”

Other Kontiki shareholders and advisors include Netscape co-founder Marc Andreessen, Intuit chairman Bill Campbell and former Netscape CTO Eric Hahn. With the Series B round, total investment in Kontiki has reached $34 million since its founding in November 2000.

Selvi would not reveal the pre-money valuation of the 50-employee startup, nor its projections for break-even and profitability. “We have performance data that shows us getting to break even, but I am not sure how helpful it is to share that,” he says. “We can see the light at the end of the tunnel, and we are feeling as good as one can feel in what can only be called a tough environment.”

Kontiki’s software allows companies to send digital files, usually documents and videos, securely and efficiently. Existing customers like Nextel and Palm use Kontiki software to deliver sales materials, training videos, employee communications and corporate documents to employees and clients.

Most of the digital files being sent at this point are documents, Selvi says, but video-on-demand is starting to pick up what has been an agonizingly slow pace of adoption.

“Video-on-demand is more of a new category,” he says. “We are seeing a lot of new demand for it, and the reasons are not all that surprising. By using video-on-demand for product launches, customer support and training, you can eliminate cost of all the traveling, video-on-demand lets you do better, faster, cheaper.”

The investment and vote of confidence by Adobe and VeriSign is certainly a good sign for the widespread deployment of Kontiki’s software. “We are very excited about the opportunities with both companies,” Selvi says. “With Adobe we see huge potential for large PDF customers to [integrate Kontiki software]. “Goldman Sachs, for example, they do 60,000 PDF documents a night, and there is a lot of sensitive information that is distributed through email and other means that is completely unprotected.”

Kontiki’s software is designed to add that layer of protection, and use the network as efficiently as possible to send the documents out.

Contact Michael Copeland