News – CMGI Leads KnowledgeWeb

In a move that could eventually ease the strain on secondary and graduate students searching for educational funding information, KnowledgeWeb recently announced that it has raised $5.6 million of venture capital in its initial financing round. In addition, the company is currently in the market with a larger Series B offering.

The initial round was led by CMGI@Ventures III with Sienna Holdings and Angel Investors LP also participating in the transaction.

“The market KnowledgeFirst deals with is a $335 million student loan market that is currently unaddressed by electronic solutions,” said Josh Daniels, an associate at CMGI@Ventures. “Eighty percent of student loans are processed using paper-based mechanisms so we saw that as a very big opportunity from both an investment and an entrepreneurial point-of-view.”

Following an earlier pilot program with Stanford Law School and Citibank, the issuer plans to use some of the proceeds from the funding to support a larger test with an expanded list of select schools and lenders.

“We’re creating a b-to-b exchange that will make our industry operate more efficiently,” said Lindsay Lee, co-founder and chief executive of KnowledgeFirst. “And in the process we’re creating a marketplace for students and families and vendors on the b-to-c side of things.”

Lee added that the Foster City, Calif.-based company gains revenue originating loans, transacting loans and cross-selling related products and services.