Qiva Nets $17.2M In Down-Round

Believing that it can best, or at least ride shotgun with, a handful of other supply chain logistics management providers in the marketplace, Qiva Inc. recently raked in $17.2 million worth of new venture financing.

Led by new investor WaldenVC, the latest infusion also included participation from existing Qiva investors Bessemer Venture Partners and Symphony Technology Group (formerly The Valent Group).

Walden GP Phil Sanderson and Matt Miller, a Walden venture partner, also received a pair of Qiva board seats as part of the financing.

At Walden’s urging, Qiva has agreed to keep the round open for friends and family affiliated with the VC firm. As a result, the company expects to bring in another couple of million dollars before holding a final close, says J.T. Treadwell, Qiva’s director of marketing.

This round will likely be Qiva’s last dip into the private equity pool, as the company is expected to reach cash flow positive “with significant reserves” within the next year, Treadwell adds.

This was a down round for Qiva, but neither the company nor its investors were rattled. Indeed, the last time the San Francisco company was assigned a valuation was back in November 2000, before the Internet bubble exploded. At the time, the company brought in $12.6 million in a Bessemer-led Series A deal. Qiva did an extension of that round under the same terms last summer, bringing in an additional $9.2 million to acquire its largest competitor and Bay Area neighbor, privately held Capstan Systems Inc.

Keeping Companies Honest

In its simplest iteration, Qiva’s software offering controls what happens to goods as they are shipped. Catering primarily to enterprises that are required to ship goods internationally, Qiva helps them track and trace inventory as it is moved from point A to point B, manage shipping logistics and make sure they are compliant with global import and export laws.

“Especially since Sept. 11, people need to be compliant in international shipping,” WaldenVC’s Sanderson says. “I heard a statistic on NPR [National Public Radio] that only 5% of the containers shipped in the U.S. are really accounted for, meaning people know what’s in them.”

Moreover, company CEOs and CFOs put their necks on the line every time a product is shipped to or from a foreign nation. If they aren’t in compliance with that country’s import or export laws, their companies could be fined, or worse, executives could be put in jail or prohibited from shipping to that country, even that continent, ever again. Qiva’s supply chain management software helps them avoid such mishaps by making sure they’re in compliance with local laws before the product ever leaves its point of origin.

“A lot of this [tracking] has been done with Excel spreadsheets by sales people internally,” Sanderson explains. “If you deal with 30 countries with five shippers each, how are you going to know who does [illegal] business with a company that uses child labor, for example? There is a big need for track and trace functionality and software to arrange logistics and make sure companies are import/export compliant. Qiva is filling that need.”

Despite the seemingly high demand for such products in the marketplace, Qiva’s solution is nothing new. Publicly traded Vastera Inc. has built a fairly successful business by offering a similar software product, although it tends to take more of a managed services approach that uses implants to handle enterprise shipping needs, which differs from Qiva’s ASP tack, Sanderson says. At press time, Vastera’s stock price was hovering at about $13.70 per share.

Privately held Celarix Inc. also could be considered a competitor, although its software is centered around more of a visibility solution that enables companies to pinpoint and improve inefficiencies in their supply chains. To date, Celarix has raised more than $75 million, whereas Qiva seems to have operated on a slightly leaner budget, bringing in just $39 million since it was founded in 1989. Celarix announced in January that it had closed a $17 million mezzanine round led by Austin Ventures. If it is planning an eventual public offering, however, it yet hasn’t made any moves in that direction. According to Edgar Online, Celarix has not filed an S-1 registration statement with the Securities and Exchange Commission.

Given its success thus far, Qiva could either be an IPO or an acquisition play, Sanderson says.

Qiva has 14,000 users in 37 countries. In addition to its San Francisco headquarters, the company has satellite offices in the U.S., Europe and Asia.

Robyn Kurdek can be contacted at: Robyn.Kurdek@tfn.com