Newsgator’s focus on RSS for business is paying off

January 12, 2009 | Eric Eldon | Comments |

RSS services provider Newsgator has focused much of its effort over the past year on developing products for businesses, and that effort seems to be paying off. The last two quarters were the company’s most profitable ever, partly because it has landed major clients across industries like finance, manufacturing and aerospace. It has also closed a $10 million sixth round of funding from Masthead Venture Partners, Mobius Venture Capital and Vista Ventures, and existing investors.

RSS stands for Really Simple Syndication, a formatting standard whereby a web site can automatically push new data (like this blog post) out to any other service that is set up to track RSS feeds. By aggregating feeds, anyone — whether an individual or a division of a multinational conglomerate — can quickly and easily keep track of what’s happening on most any web site they care about.

While free web-based rivals like Google Reader are popular with your average RSS-reading consumer, Newsgator’s enterprise software can be hosted locally and customized to integrate with other software developed by clients. It includes features designed for groups, like reports on who is reading what and how often (see screenshot). Businesses like these features because they want to control their own data and deploy new software products together with products they’ve implemented in previous years.

When we covered Newsgator’s previous funding round, nearly a year ago, the company noted that it was working with a hundred mid- to large-sized businesses. Today, here’s who the company says its clients are:

* Two of the world’s top three banks
* Two of the three largest banks in the US
* The world’s largest private public relations firm
* The second-largest advertising agency in the US
* Two of the top three US manufacturers of network and communications equipment
* The world’s second-largest law firm
* Four of the top 15 US pharmaceutical companies
* Two of the top seven US aerospace and defense companies
* One of the top five investment banks in Canada
* The fourth-largest generator of electricity in the US
* The largest commercial bank in the US
* One of the top five life and health insurance firms in the US
* One of the top five telecommunications companies in the US
* The world’s largest ERP company
* Three of the world’s largest providers and publishers of news and information

The company also offers a range of free RSS readers, including an application that lets you read RSS feeds on your iPhone. It has raised $39 million to date.

[Update: A bit of controversy has broken out about the state of "Enterprise RSS." Marshall Kirkpatrick of ReadWriteWeb wrote a skeptical post earlier today, questioning how much usage (and money) NewsGator was getting with business customers. Brad Feld, an investor in Newsgator has fired back with this post discussing NewsGator's position today. More in comments, below.]

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About the Author, Eric Eldon

Eric currently covers digital media technology and business news, especially what's happening on social networks and their platforms. He also writes and edits stories about venture capital, and lots of other stuff, too. He started at VentureBeat in the spring of 2007, half a year or so after Matt Marshall left his reporting job at the San Jose Mercury News to found the site. Eric previously cofounded a startup called Writewith, that was building editorial software for newspapers and other groups of writers. The startup didn't work out, but he learned a lot.

  • jimgray69
    ReadWriteWeb has a different take on this...http://tinyurl.com/7exrow
  • Jim, that's an interesting article, but it doesn't address Newsgator's revenue claims nor its list of partners.
  • narphorium
    It was funny seeing both articles pop up at the same time in my RSS reader. I doubt enterprise RSS is completely dead already. A more likely explanation is that its having a slow start much the same way that consumer RSS did.

    This article seems more factual and less sensationalized than the RWW one but without any hard numbers from Newsgator its anybody's guess.
  • How much of that revenue is coming from RSS feed servers and how much from ad widgets and other new products? How many of those clients are paying customers? Why on earth does this company need a 6th round of funding if things are so rosy? I like Newsgator but I don't buy this.
  • Marshall, those are good questions.

    RSS ad widgets and other new products aren't known for making lots of money. So I seriously doubt that these areas are where the company's new revenues are coming from.

    I agree that the sixth round of funding doesn't seem good, but given the lack of transparency (a normal standard for any private company), I'm not ready to draw sweeping, negative conclusions.
  • Marshall / Eric - I've written a response to Marshall's post at http://www.feld.com/wp/archives/2009/01/enterpr.... I've been an investor in NewsGator from the time the company was one person (the founder - Greg Reinacker) and am more excited about the prospects for the company at this time then any in the past. I'm happy to talk to either of you in depth about it at any time.