Vignette Software Corp, a rapidly expanding Texan startup which specializes in web content applications, has just secured a huge slice of private equity finance, enabling it to buy out RandomNoise Inc, a fellow web software house. Vignette has secured a further $14.3m from industry heavyweights Hambrecht & Quist LLC, Goldman Sachs & Co and Amerindo Investment Advisors Inc, bringing the total venture capital investment in this two year old company to a sizeable $27.8m. Being privately held, the company hasn’t released any of its financial information, but sales last year were estimated to be around $5m to $10m, growing to around $20m this year. Vignette’s software is used to build web content, and although it’s modular in format, there is still a sizeable amount of manual coding involved, slowing the process down. The acquisition of RandomNoise will place a graphical front end on Vignette’s existing applications, bringing a dramatic reduction in the time it takes to build content, the company says. RandomNoise’s product is complete, and has sold around a thousand licenses to date, but the San Francisco-based company had failed to raise further financing, and was on the verge of shutting down. The price paid in the deal hasn’t been disclosed, but the company called it attractive. Vignette currently employs around 140 staff, and its customers include Ziff-Davis’ ZDNet, CitiBank and First Chicago NBD. Some of the newly raised cash will be pumped into expanding Vignette’s US sales force, and the rest will be for targeting further acquisitions. Ross Garber, the company’s 31 year old CEO, says the raising of additional finance at this stage has diluted existing equity by around 10%. But by funding growth now, Garber reckons to double Vignette’s value when it comes to flotation sometime next year.
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