[Posted on March 19, 2008 - 4:35 PM]
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DiggInternet product advice company FixYa Inc. said Wednesday it raised $6 million in a second venture capital round from previous investors to support growth of a three-year-old consumer product support community.
Pitango Venture Capital of Israel and Mayfield Fund of Menlo Park, Calif., stepped up to fund the round after backing the company's $2 million Series A round in early 2007. The new funding is expected to be the company's final capital call, with FixYa projecting it will generate cash flow by year's end.
The new money will enable the company to expand corporate infrastructure and marketing activities at its new headquarters in San Mateo, Calif., and to support additional technology development at its founding headquarters in Tel Aviv.
FixYa founder and CEO Yaniv Ben-Saadon said the company saw no strategic need for additional board representation, and that Mayfield and Pitango were eager to foot the entire round, so he did not seek new investors. He would not disclose a valuation for the round, but said it came at a large premium to Series A.
"Whatever assumptions we had on traction of users and monetization at the time of the A round were surpassed by multiples, and we used that to get an amazing deal," Ben-Saadon said. "We are close to break-even and will be profitable in 2008, but the deal terms were attractive, so it made sense to raise the money to really build the infrastructure."
FixYa was founded in early 2005 with $400,000 in angel investment to build an online community where users could share product support advice on a variety of consumer products. The site went live that August and has gradually added features and categories of service as its user community has expanded.
The company sells brand advertising tied to both pre- and post-purchase product inquiries, and with expansion it added a brokerage of premium services offered by professional users.
Most recently, FixYa has partnered with consumer product companies to allow them to offer their customers branded access to the site with special features pertaining to their products. Ben-Saadon said the company just closed two deals with a major retailer and a service company, but he declined to name them until the partners launch the services.
Raj Kapoor, a managing director with Mayfield, said manufacturers are committing fewer resources to product support at the same time products are becoming increasingly complex, and he said FixYa's community-based system creates an efficient way for users to ask questions and get answers from their peers.
Ben-Saadon said the company makes no effort to recruit experts, and the system is structured to downplay the distinction between users and experts to allow for a free flow of information and advice. But FixYa offers professionals a forum to market services beyond what a typical user requires, with the company offering an e-commerce platform for service transactions.
FixYa will use the new money to continue to expand technology development in Israel, where it has 16 employees. But Ben-Saadon said the bulk of the company's growth will be in San Mateo, where it has eight employees in marketing and operations.
FixYa used no outside financial adviser for the round, and had legal work in closing it from Asher Assis of Naschitz Brandes & Co. in Tel Aviv.
