MarketSoft Channels $45 Million Fourth Round

With its revenue stream already flowing from an impressive roster of top-tier customers, e-marketing software developer MarketSoft Corp. is expected to announce today that it has secured $45 million in a Series D round of venture capital financing.

The oversubscribed transaction was originally launched with a $25 million target capitalization, but the company upped the final ante in order to achieve greater diversity among its investor base.

“There’s obviously some more dilution… [but] the only way to get a world-class financial cabinet was to raise this much money,” said Greg Erman, chief executive officer and president of MarketSoft.

Putnam Investment Management technically acted as the lead investor on the deal with its $10 million investment being matched by J. & W. Seligman & Co. and American Express Co. Putnam’s lawyers drew up the final papers, although MarketSoft did lower Putnam’s offered valuation by $5 million in order to accommodate American Express.

“It was worth the valuation hit in order to bring [American Express] on board,” Erman said.

He added that the company’s existing backers were interested in investing a combined $30 million in the new deal, but that their final buy-in was cut down to $10 million. Those firms included Prism Venture Partners, Advent International Corp., BancBoston Capital, Canaan Partners and Fidelity Venture Management. The only existing investor not participating in the Series D deal was Silicon Valley Bank, which had provided MarketSoft with a $3 million capital equipment loan last summer.

Heavy Hitters

“We had to give up a lot to get into this round since it was so oversubscribed, which I think was primarily caused by the company’s customer list,” said Marcia Hooper, a partner with Advent International.

Those customers cover a variety of industries and currently include such names as Microsoft Corp., IBM Corp., Polariod Corp., Cisco Systems Inc., Anderson Consulting and Dun & Bradstreet.

Beyond the customers, some investors may have also been drawn to MarketSoft s ability to garner the interest of Wall Street analysts. In fact, the Series D round’s final $5 million was taken up by a quartet of unnamed investment banks that had been previously involved with MarketSoft.

“The investment banks that did invest have been following the company closely for a year or more,” said Jim Furnivall, general partner with Canaan Partners. “So [MarketSoft] extended the investment opportunity while it’s still private as a little bit of a reward.”

As for whether or not those particular banks will likely grace MarketSoft’s eventual initial public offering, Furnivall said it was too early to tell. “I’m sure they’ll at least get to make their case,” he said.

With the IPO window currently closed, however, the company is going to continue focusing on convincing large industrial companies to improve their online marketing channels.

“We never really focused on dotcoms because only bricks-and-mortar companies have the type of distributed market departments that are applicable to our products,” MarketSoft’s Erman said. “This new money will help us expand our war chest to help broaden our product line and possibly conduct some acquisitions.”

Dan Primack can be contacted at Story Feedback.