Lithium Closes Round D of Funding – First Take

On January 5th, 2012 Lithium Technologies announced it had closed Round D funding to the tune of $53.4 million, adding to the $39 million it had raised in previous rounds.  The proceedings will go towards “completing the suite” and international expansion according to the company.

Among the new funding partners, Lithium signed up NEA as leading partner as well as SAP Ventures.  Existing funding partners all continued their support as investors.

Earlier today I distributed a note to my clients with detailed analysis of this event, here are the main points:

  • The main result of this announcement is to take Lithium off the list of companies that will be acquired soon.  The total amount of funding received (close to $100 million) and the expected returns from investors, company founders, and employees makes it a very expensive company to acquire.
  • Lithium has focused mostly on the “Social Brand” (marketing) aspects of their product in the past year, and we expect the majority of the investment in completing the suite to go to that side as well.  We advocate a cloud-based analytics solution for the top of their shopping list.  Lithium’s strongest market presence is in support communities, and while it remains committed to that sector, we don’t foresee them completing a support suite before a Social Brand suite.
  • We absolutely believe the international expansion is going to bring them a good return on investment for many reasons, but primarily allows them to focus on global brands.

One final point of notice, SAP Ventures as an additional investor in the company brings a very interesting wrinkle to the game.  SAP Ventures is a very conservative firm focused, among other things, in funding potential strategic partners and acquisitions for SAP.  We will see where things go.

We expect no major changes in the short term, acquisitions they will make are bound to introduce changes in the long term – but we cannot predict those.  We foresee an IPO event in the 12-18 months timeframe.

For further questions, please contact me.

2 thoughts on “Lithium Closes Round D of Funding – First Take”

  1. As for whether the $50M makes them more or less likely to be acquired is perverse in my mind. On the one hand, your point is valid, with $100M in and the expected return from the VCs it will be expensive to acquire Lithium. On the flip side, the company will, imho, execute a go-big or go-home strategy, spend lots of that cash (think Jive) in order to show high growth which will theoretically make them more attractive and more likely to be acquired.

    Best,
    Dave

    1. Dave,

      Interesting, you are the second person in as many days that suggests that similar strategy. I don’t think that they will, but I have been called naive before (among many worse things). If you look at the final days before Jive’s IPO – the flurry of activity around acquisition v IPO was staggering (if you are to believe the rumors, of course — no one knows, right? and the ones who know, won’t talk).

      I am just going to watch what happens, one of many reasons I love what I do, and will be glad to buy you a cup of coffee when they get acquired :-)

      thanks for the read and comment!

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