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Sutter Hill leads investors in funding
for InQuira
Daily Deal Software maker InQuira Inc. picked up $9.25 million in a second funding round led by Sutter Hill Ventures of Palo Alto, Calif., to promote advanced search technology to help organizations with large call center and data retrieval requirements more easily offer self-service information over their Web sites. Sutter Hill joined previous investors Partech International, Walden Ventures,
both of San Francisco and Bank of America Corp. of Charlotte, N.C., to
bring InQuira's total equity fudning to $30.25 million, in what is expected
to be its final call for private capital. InQuira president Chuck Williams would not disclose the valuation of the company with the new investment, but said it represents a great deal of progress from the company's $13 milion first institutional round in March 2002. Williams said the company chose from multiple term sheets, selecting Sutter Hill's offer based on a number of factors, including valuation. San Bruno, Calif.-based InQuira did not use an outside financial adviser
in putting the deal together, and call on the legal services of Mark
Tanoury of Cooley Godward LLP. " There was a great deal of synergy, but the two companies had taken very different technology approaches at the core engine level," Williams said. "That turned out to be additive, but we didn't discover that until after the merger." The company is targeting a market for products that help companies cut
the cost of providing customized information both to clients and in-house
users of Web services. Jupiter Research has projected that so-called "search self-help services" will make up about 15% of spending on customer relationship management on the Internet by 2008, and that this larger market will grown from $9.6 billion last year to $18.9 billion in 2008. That pegs the self-service search portion at about $2.8 billion. InQuira competes with startups including Cupertino, Calif.-based customer relations management (CRM) software maker Kanisa Inc., which recently bought the self-service unit of AskJeeves Inc., and Williams said the company could potentially face competition from larger search engine companies including Google. " We certainly compete with the generalists, but they don't have the capabilities for Web self-service," he said. Jim White, a general partner with Sutter Hill, said his firm has been tracking the sector for some time, and that the combined strength of InQuira's predecessor companies and its recently released version 6 integrating the features of each, attracted him to the investment. He said InQuira's record of sales and anticipated growth with the new release put the company in the right position at the right time. " We fundamentally believe companies are shifting their use of the Web to much more core services and we have been tracking the space for two or three years, and have seen that buying patterns have turned," White said. "Now everyone thinks first of going to a Web site for answers, and if you talk to CIOs, self-service Web services are usually in their top 3 initiatives." Williams would not say what InQuira's sales are, although customers include
Bank of America, BEA Systems Inc., of San Jose, Calif., Hamilton Sundstrand Corp. of Windsor
Locks, Conn. and Yahoo! Inc. of Sunnyvale. " What we do after that depends on strategic opportunities," he said.
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