Escalate nabs $24.4M with new software
by Tyson Freeman
TheDeal.com
Updated 12:33 PM EST, May-29-2002
With a new plan following the dot-com bust, retail software maker Escalate Inc. has closed a $24.4 million fourth round of funding.
Lighthouse Capital Partners led the deal with a $9.6 million contribution, which was a conversion of prior debt to equity. Prior investors Focus Ventures, Accel Partners and Norwest Venture Partners returned in the round.
Jim Lussier, a venture partner at Norwest, which kicked in $4 million in the round and was an original investor, said the company has begun to focus on an attractive software segment. "This sector — supply-chain order management — is one of the last major untapped areas in enterprise software," Lussier said. "We also like that the company is led by a proven entrepreneur."
Keng Lim, the company's founder and CEO, also founded Mountain View, Calif.-based extranet software maker Kiva Systems Inc., which he sold to Netscape in December 1997 for $180 million in stock.
The Redwood Shores, Calif.-based company now sells software that helps retailers manage product orders online from their inception to delivery.
Despite optimism for the market, Lussier said the decline in public valuations and the downdraft in information technology spending took its toll on Escalate's valuation. Lussier said Escalate's post-money valuation in its last $38.1 million round raised in March 2001 was about $240 million. He would not provide the valuation of the current round, but said it has followed the market "down consistently."
That prior round came from Charter Growth Capital LP, eVentures/Bank of Singapore and Norwest. It also landed $26 million in October 1999 from the Barksdale Group, which disbanded in January, Discovery Ventures, and Norwest, and an undisclosed first round before that.
Founded in 1999, Escalate initially cast itself as a broadly defined "e-commerce service provider," taking and fulfilling online sales orders and setting up Internet sites for online companies. The company had to shift its emphasis after many online clients disappeared, Lussier said.
It now counts Friedman's/Crescent Jewelers, Williams-Sonoma Inc., Spalding Sports, AOL Time Warner Inc., Encyclopedia Britannica, LVMH Moët Hennessy Louis Vuitton and Heritage Mint Ltd. as customers.
Bruce Golden, a partner at Accel Partners, said Escalate can survive alone, but it controls a key operational process for retailers and has enough intellectual property to make an attractive takeout target.
"I think there is real opportunity for order management vendors, or the more broadly defined demand-chain-management software vendors," said John Derome, an analyst with the Yankee Group in Boston. "And the order management market is still relatively immature so there are still opportunities for more niche players like Escalate."
Derome said Escalate may eventually have to compete with more-established players in supply-chain management software such as i2 Technologies Inc. in Dallas as the order management sector matures. |
