Voxeo Dials Up $20M Series C

Hoping to revolutionize customer service over the phone, Voxeo Corp. recently nabbed $20 million in a Series C round of venture capital financing.

The Scotts Valley, Calif.-based company claims to offer voice services that can help a person who phones in to a company the same way a search engine like Yahoo! does.

“You could just ask a question and the program would respond. Or you could hit a button and get driving directions. The service is a complete suite,” said Dustin Gross, a senior vice president at Voxeo.

Voxeo already has its products on the shelf, and Circuit City and BestBuy are just two of the big-name customers on its 60-client roster.

“If you don’t have access to a computer but want to know where the closest Circuit City is, Voxeo will make the information available in an easy way,” Gross explained.

Other Voxeo customers include Blue Wireless, Ford Mobile Dispatch and Fleet Operators.

Perhaps their main attraction to Voxeo is that it’s inexpensive.

“Most of our customers are looking to reduce support costs. This is a cheap way to keep customer service on an acceptable level,” Gross said.

This latest round was co-led by existing Voxeo investors Crosspoint Venture Partners and the Mayfield Fund. This was a slightly down round for the customer relationship management company, so Voxeo worked out a deal with its investors whereby it can draw from the $20 million infusion as needed, but the company also reserved the right to return the money at any time and bring in a new lead investor who might be willing to assign it a better valuation.

David Ladd, a partner with Mayfield and Voxeo’s newest board member, said his firm agreed to these terms because Voxeo recently brought in a new CEO. Instead of having her spend her time raising money, they thought she should instead concentrate on learning the business.

He went on to say that if the new chief executive does her job right and gets the business moving, she can then raise money at a better price.

“The key is to give her time,” he said. “The last thing you want to do is hire a CEO to run the business and raise money. We basically feel this is a good company, and doing an insider round shows our support.”

Regardless of who ends up leading the round and how much the company ultimately takes in, Gross said he expects this to be Voxeo’s last VC infusion.

“You never know what is going to happen, but this should see us through all of next year and get us to cash positive,” said Gross.

Voxeo plans to use this round to build out the solutions and beef up its sales and marketing efforts, however, the firm does not plan to add any employees to its 75-person roster.

“We are not mass marketing. We are only trying to reach [top-tier] companies and we already have a direct sales team of 20 people. We don’t need a brand name, we just need to reach our targeted audience,” said Gross.

Voxeo raised a $3 million Series A round in March 2000, and $25 million in second round financing in September of the same year.

Danielle Fugazy can be contacted at:Danielle.Fugazy@tfn.com