Deals

Salesforce.com to acquire hard-sell business directory Jigsaw for $142M

Salesforce.com, whose no-download business software is used by companies to organize their operations, announced today that it has entered into an agreement to acquire Jigsaw, a “data as a service” company that offers access to its crowdsourced online business directory. Salesforce will pay $142 million for the company, along with a performance-based earn out up to 10 percent of the purchase price.

We last covered Jigsaw when it announced that it was profitable last year, at which point it also saw its revenue double for the fourth year in a row. The site’s 1.2 million customers have built an online database of over 21 million contacts at 4 million companies. Jigsaw sells access to the database for a subscription fee, which gives it a constant source of revenue while also giving customers access to up-to-date information.

The company’s history has been notoriously controversial. When it launched in 2004, Jigsaw’s marketplace for contact information seemed like a boon to marketers, but a major annoyance for businesses. It paid users for submitting contacts, and didn’t make it easy for those who were placed in its database to opt out. This, understandably, led to major privacy concerns.

Even though paying users for submitting contacts was its initial source of revenue, Jigsaw told us last year that it accounted for no more than 15 percent at that point. Instead, it saw more business in selling services around its database, like its Data Fusion product — which lets companies automate the collection of data into customer relationship management (CRM) databases like Salesforce’s.

With the acquisition, Salesforce will be integrating Jigsaw’s technology into its cloud services for all of its current customers (it will still remain open to other CRM vendors). It also signals Salesforce’s entry into the $3 billion cloud data services market, and will allow the company to expand its existing partnerships with data service providers like Hoover’s and LexisNexis.

The deal is expected to close in the second quarter of the fiscal year 2011. The San Mateo, Calif-based Jigsaw previously raised $18 million in venture funding from Austin Ventures, El Dorado Ventures, and Norwest Venture Partners.