The flavor of the month is “on demand” — and the funding activity lately is at alarming levels. Web 2.0, you are being eclipsed!
The latest is San Mateo’s SuccessFactors, which raised $45 million, a whopper of a round, and which made us decide to write this post. The software helps companies manage their human resource issues, such as compensation and career development. Granite Global Ventures led the $25 million equity component, while Lighthouse Capital contributed $20 million in debt. It is a five-year-old company.
Our email server is smoking with announcements from other Silicon Valley “on demand” start-ups. What you’re seeing are Web-based companies getting bought by the big guys (Oracle, SAP), and M&A action elsewhere (Nistevo was bought this month) which is leading to more funding, and also scaring the daylights out of other “on demand” start-ups that are in stealth mode, forcing them out of the bushes to announce they too are around.
“On demand” refers usually to Web-based software programs that you can use as you want, wherever you want, and pay as you go. It is all the rage, because it lets you avoid paying hundreds or thousands of dollars up front for large software subscriptions. A related term is “Software as a Service,” known as SaaS. Here is the latest:
— Also new is Burlingame’s Marketbright, for managing online marketing campaigns. It will launch in early June, the company tells us.
–Entrepreneur Halsey Minor has backed Kareo, for healthcare billing.
–Santa Clara’s OpSource takes the opportunity to tell VentureWire that it too is searching for cash. The company helps other companies develop their own on demand services. It wants to raise $15 to $20 million in debt and equity financing “near term.”
—Instantis, of Santa Clara, sells software to track and improve employee performance, and has raised $8.8 million from U.S. Venture Partners, along with exisiting investors JK&B Capital and Shea Ventures.
—oDesk, of Sunnyvale, provides a way for companies to tap tech talent when they want. oDesk has relationships with techies who like to stay at home and work their own hours. It contracts with them to do work for you when you need it. It wants to undercut big outsourcing/offshoring companies like Infosys and Wipro, which serve mainly large firms. The company tells us it has $6 million in backing from Sigma Partners and Globespan. Google ads are the only way it acquires users. Here is a Business Week article about the company. It too has been stealth since 2004, and is only now coming out into the open.
–There are other types of on-demand services too, such as computing. Bill Coleman, co–founder and former chief executive of BEA Systems, launched Cassatt several years ago to do that, and just raised $15 million more in venture capital.
There are many, many more examples. Mark it down: May is when “on-demand” hit hype mode.