LivePerson Closes $19M Second Round

Through a combination of institutional and high-profile individual investments, LivePerson earlier this month raised $19 million in its second round of venture financing. The New York-based company provides Web-based customer service and sales support to more than 120 e-commerce retailers.

Highland Capital Partners of Boston led the Series B round with an $8 million investment. Goldman Sachs Group, $3 million, and Hambrecht & Quist investment affiliate Access Technology Partners LP, $2 million, also participated.

Individual investors, including Edventure Holdings editor Esther Dyson and Henry Kravis, and returning investors accounted for the balance.

In January, LivePerson raised $4.6 million from Dawntreader, FG II, Allen & Co., Sculley Brothers, Silicon Alley Venture Partners and several additional individual investors. Highland Partner Wyc Grousbeck has joined the LivePerson board.

“There is so much going on in the space,” said Chief Executive Robert LoCascio. “We need to increase our sales staff and expand our marketing campaigns in order to continue in our leadership position.”

LivePerson’s three-tiered marketing campaign includes print advertisements (the company’s ads have appeared in recent editions of Business Week and The Industry Standard), banner advertisements and trade shows. LoCascio anticipates signing more than 300 additional customers by year-end.

On an outsourced basis, LivePerson provides real-time customer service for online shoppers, without the need for downloads or installations. While less than 1% of online visitors actually make a purchase, an internal report produced by the company and shared with its customers reports that this figure jumps to 35% with the use of LivePerson technology.

“The hosting service model extremely improves sales,” said John Sculley, founder of Sculley Brothers and former CEO of Apple Corp. “Live e-tailing is the obvious extension of customer support and adds greatly to the conversion rate.”

Although he would not provide a timetable, LoCascio said the company’s next round of financing will be in the public markets.

“$19 million is pretty big, and there is not much more to do on the private level,” he said. “Our next move will be in the public market, when the dust clears.”