Nightfire Targets Telecom Management

While digital subscriber line (DSL) service is billed to offer next-generation Internet access, the ordering process hearkens back several generations, often requiring repeated telephone calls to correct repeated errors.

Nightfire Software Inc. identified this situation in 1998 and has since developed a software program that automates the ordering process.

“Our products automate the mundane chore of getting phone lines from phone companies for last-mile service,” said Jerry Rudisin, president and chief executive of Nightfire.

The market opportunity clearly impressed venture capital firms, as the company closed on $30 million Feb. 2 in a second-round financing that Rudisin said would likely be the firm’s final foray into the private market.

New Enterprise Associates led the financing as the only new investor. Every existing investor in the company – U.S. Venture Partners, Sequoia Capital and The Roda Group – participated, accounting for the balance of the commitment.

Nightfire has now raised $36 million in venture capital.

“They are the absolute leader in the DSL deployment area, which is hugely open-ended,” said Peter Morris, general partner at NEA. “They have basically five of the top five service providers of DSL locked up.”

Nightfire’s focus has been to provide back-end service to DSL companies, specifically purchasing phone lines from carriers for new subscribers. Rudisin said traditional processes require multiple phone calls that are made necessary by the 70% error rate on orders for broadband service deployment.

“There are several issues encountered in deployment – bandwidth, circumventing switching equipment and automating service management,” Rudisin said. “We help with the back-end that turns on the service, and we are unique with this product service and that we manage the whole process.”

Nightfire intends to remain focused on the broadband information technology marketplace, which includes DSL, cable and wireless. However, Rudisin said proceeds from this financing would be used to deepen the company’s competence in the area. These efforts will include expanding the staff to as many as 180 from the current 90 by year end, primarily within the engineering side. Additional investment will be made in the sales and marketing areas, and he added that the money will not be spent on a Super Bowl ad.

“My investors made me promise that,” he said.

Following this investment, and provided the company continues to hit its plan, Rudisin expects to hold an initial public offering in approximately one year.

“I’m a bit old-fashioned in that I’d like us to be profitable when we go public,” Rudisin said. “In an infrastructure company that is important.”