CapLinked extends its Series A to $2.1M, adding more financial community advocates

By Michael Carney , written on May 9, 2013

From The News Desk

Six months after announcing a $1.6 million Series A round, cloud-based Virtual Data Room startup CapLinked revealed today that it has since expanded that round to a total of $2.1 million. Newly added investors include Conversion Capital, Inflection Ventures, The Artesian Group, Google software engineering manager Chris Harris, and former AccessDNA founder Lee Essener. The group joins existing investors FF Angel, Siemer Ventures, 500 Startups, Peter Thiel, and Yammer founder David Sachs, among others, bringing the company’s total financing to $3 million.

CapLinked takes what is typically an ugly and inefficient, yet overpriced software category and makes it both more beautiful and more affordable. Not bad as far as value propositions go. The company’s target clients are VC and private equity firms, investment banks, M&A advisory firms, law firms, corporate development departments, and anyone else regularly managing complicated business and financial transactions.

In these instances, it is typical for hundreds of documents to be shared between multiple affiliated parties. And while typical cloud storage platforms can handle the accessibility and organization aspects, they fall woefully short in terms of offering the level of granular permission setting, access tracking, and security necessary in this heavily regulated environment.

The existing generation of virtual data room solutions can cost upwards of thousands (or tens of thousands) of dollar per month – often charging by the page and the number of individuals granted access – making them impractical for all but the largest and most price insensitive buyers. CapLinked is roughly one tenth of the cost, despite offering a more modern and user-friendly solution.

Business intelligence firm IBIS World predicts that VDR industry sales will grow to nearly $730 million in 2013, with the vast majority of the industry’s revenue currently going to IntraLinks, Merrill Datasite, and RR Donnelly’s Venue. These legacy companies are prisoners of the innovator’s dilemma and have resisted nearly all technological and business model progress for fear of losing out on their existing cash cows.

The three year old startup has hundreds of thousands of users and has managed tens of billions of dollars in transactional value to date. Publicly named customers include Thomson Reuters, NextView Ventures, RezVen Ventures, Sun Capital, and Turnstone Real Estate, among others. The company’s growth prospects are both enhanced and potentially hindered hindered by the “smallness” and incestual nature of the finance industry. When something catches on and becomes the industry standard it can spread virally in a hurry. But it can be equally difficult to break through when an existing solution is deeply entrenched.

CapLinked will benefit not only from the additional capital, but from the strategic value of its newly added investors. Because the company is in the rare position to raise capital from among its target customers, each new backer is another industry advocate. The company arguably has the best solution in the market today. The challenge going forward is for CapLinked to refine and scale its customer acquisition engine push it across the tipping point of mass market adoption.