When SageMetrics Corp. founder and CEO Kenneth Nwabueze opened the company’s financing round late last year seeking $5 million, he had some trouble getting investors’ attention in the post-Sept. 11 venture climate. This was somewhat troubling to Nwabueze, since his company already was blessed with positive cash flow and an A-list of impressive customers.
In the end, however, SageMetrics raised the necessary money and then some. The North Hollywood, Calif.-based online and offline data mining company closed the round at $6 million. Ascend Venture Group LLC of New York led the round, with Series A investor JPMorgan Partners participating again. Darryl Wash, a managing partner of Ascend, and David Bowden, a general partner with Ascend, took seats on SageMetrics’ board of directors.
The company’s principal product, the SageAnalyst Suite, offers a multitude of benefits for clients such as L’Oreal, Royal Philips Electronics and Virgin Trainline in Europe and Washingtonpost.com, Cox Interactive Media, The Tribune Company and JP Morgan in the United States.
The product gives companies information such as: who is buying what, where and when; what products are selling, and at what price; what offers are being accepted and ignored; what information is being accessed and by whom; how customers prefer to learn about your company and products; and where they go and what they want from you after a transaction.
With the product already shipping, the money will be used to expand the customer base in the U.S. and Europe. European clients account for 21% to 25% of SageMetrics’ business, according to Nwabueze.
“We’re not talking about off-the-chart expansion. This is going to be managed growth so we will get back to being cash flow positive, hopefully, early 2003,” Nwabueze says. “From that perspective, I would imagine that this would be our last round.”
Nwabueze adds, however, that if acquisition opportunities arise within the industry and the company needs to raise money to bid on a company, he is confident they are fundable.
Wash, the Ascend managing partner, says SageMetric’s proven technology, solid management, demonstrated financial viability and impressive clientele make them an attractive investment. Also important was that the deal was initiated within Ascend’s “proprietary network,” which Wash says includes minority and women.
“We use it is as a deal sourcing strategy that just gives us a different place to traffic than a lot of the historical VCs,” Wash says.
He notes a similarity between SageMetrics and SchoolNet, another Ascend portfolio company, which provides data mining and warehousing solutions for use in monitoring school performance.
Founded in 1997 by Nwabueze, SageMetrics has secured $11.7 million in financing since April of 2000. Companies offering similar services to businesses include publicly traded Hyperion and the private company DigiMine Inc. Nwabueze currently serves along with 23 other influential industry and academic leaders on President George W. Bush’s Council of Advisors on Science and Technology, to which he was appointed last year. T.