Brad Feld

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NewsGator’s New Round

Apr 25, 2005
Category Investments

Last week, NewsGator announced that they had raised a new round led by Masthead Venture Partners.  This brings the total amount raised by NewsGator to over $10 million.  David Beisel – an associate at Masthead who worked on the deal – has an extensive post on why they decided to make the investment.  Rather than repeat what David said here, check out his post on why he likes Masthead’s NewsGator investment.

In addition to all the obvious reasons I’d be excited about this (additional capital, strong validation of NewsGator’s position in the market, more hands on deck to help build the company), I’m particularly happy to have the opportunity to work with Rich Levandov – the partner at Masthead who is joining the NewsGator board.  Rich and I worked together in the mid-1990’s when we were “Softbank affiliates.”  At that time, Softbank had started aggressively investing in US-based Internet companies and the initial team at Softbank roped in a few people – including Fred Wilson, Jerry Colonna (fka “the Flatiron guys”), Rich, and myself in an “affiliated” role.  We did investments with Softbank and were an extension of the initial Softbank team.  Rich had two very successful investments with Softbank – Art Technology Group (Nasdaq: ARTG) and Personalogic (acquired by AOL).

This affiliate relationship ended when a group of us – including me – decided to raise the first Softbank Technology Ventures fund – which was a Softbank “sponsored fund” (independent of, but still affiliated with, Softbank, who became one of our limited partners.)  Rich opted not to join this fund and while we stayed in touch, we didn’t make any investments together. 

At the beginning of this year, Rich gave me a call asking about NewsGator.  We had just closed a round and were not looking for additional money (or investors) as the company was well funded.  However, I got excited about the idea of working on something with Rich again and he quickly got engaged with the NewsGator gang.  The normal VC process ensued with both sides getting to know each other and it quickly became clear that Rich / Masthead would be a big addition to the team.  We reached terms that made sense for all parties about a month ago and quickly closed the deal.

While the team at NewsGator has spent some time on this financing, they have a huge pipeline of new things coming in the next 90 days.  For a taste of the stuff we are doing with traditional media companies, take a look at the demo of News Hound, the new Denver Post News Aggregator.