Posted by: Spencer Ante on September 30, 2008
Even though the IPO market is kaput and mergers and acquisitions activity is drying up, startups with a good idea and some momentum continue to raise money.
Case in point: Gigya, a Palo Alto-based startup that makes software allowing people and companies to distribute widgets across social networks, raised $11 million in a “C” round led by DAG Ventures, which ponied up most of the money. In March, just six months ago, Gigya raised $9.5 million in a “B” round led by Mayfield Fund, with additional investment from existing investors Benchmark Capital and First Round Capital.
Gigya is growing fast. In August, comScore reported that Gigya served more than 150 million widgets worldwide during the month of June, up from 120 million widgets in March. In addition, Gigya claimed 55 million unique U.S. users in June, up from 44 million in March. See updated data below based on new comScore numbers.
Gigya was not planning to raise another round of financing, but Navin Chaddha, a managing director at the Mayfield Fund who is also a director of the company, encouraged Gigya to take advantage of any financing offers given the slowdown in the economy. DAG Ventures came knocking in July, putting an offer on the table at a higher valuation than was placed on the company in March, says Chaddha. “If extra capital is available take it,” he says.
Even though the investment diluted the ownership stakes of the company’s employees, Chaddha persuaded Gigya’s co-founders to take the money. “Navin convinced us that being diluted a little bit more would be worth it,” says Gigya co-founder and president Rooly Eliezerov. “It keeps us from being distracted. We have air for three years. Nobody will be looking around for a job.”
Eliezerov says the company will use the funds primarily to expand its sales force. Gigya currently has five sales people and wants to hire 15 more sales people by yearend.
Gigya works with companies such as Levi Strauss, Wal-Mart and Sony Pictures to create and distribute widgets that market their products across the Web. They are creating a performance-based business model in which they only get paid when a person installs a widget on their Web site, blog or social network page.
Update: Two updates on the comScore numbers. One, new data came out today from comScore showing that Slide was the most popular widget network, with Gigya close behind it. In July, 170 million people worldwide viewed Slide widgets, compared to 158 million people who viewed widgets by the Gigya network.
In addition, I learned that the comScore chart I referenced for the June numbers above contained incorrect information. It turns out that in June Slide was the most popular widget network, with 161 million people worldwide viewing Slide widgets, compared to 150 million people worldwide viewing widgets on the Gigya network.