Friday, May 23, 2008

Demandware gets $9M in new round

By Christopher Calnan

Woburn-based e-commerce software company Demandware Inc. has completed a $9.1 million Series C round of financing — four months after one of its customers collapsed trying to use its platform to develop a major national retail website.  

Demandware, founded in 2004, is one of several types of e-commerce platform developers that fall into the console category, providing software for online retailers that lack information technology support and prefer to buy technology on a monthly subscription basis. Customers include Bare Escentuals Beauty Inc., House of Fraser and The Timberland Co., according to Demandware’s website. Other e-commerce console developers include Canada-based Truition and London- and New York-based Venda Inc.

Founder Stephan Schambach, Demandware’s executive chairman, said in late April the financing would be used to grow Demandware’s business but declined further comment. CEO John Pearce was traveling this week and couldn’t be reached for comment, officials said.

The funding follows the demise of Cambridge-based n2N Commerce Inc., which shuttered its business in January after its sole customer, Victoria’s Secret Direct, dropped n2N while the company was developing Victoria’s Secret’s new website using Demandware’s platform. At the time, industry insiders said Demandware’s software-as-a-service platform played a role in the matter because such software isn’t designed for complex e-commerce websites.

The site was scheduled to launch during the second half of the year. But n2N, which employed 70 workers, closed shop just one year after it received $30 million in venture capital, one of the largest Web 2.0 financings in the nation during 2007.

In March, Demandware reported record growth for 2007. It also reported an average implementation cycle of four months.

Demandware’s latest financing increases the total venture capital received by the company to $31 million. Investors include Cambridge-based General Catalyst Partners and Waltham-based North Bridge Venture Partners, according to a filing with the U.S. Securities and Exchange Commission. Federal documents indicate that Demandware has attracted five investors.

Demandware also reported expanding its Woburn headquarters last year and opening new offices in the United Kingdom and Germany combined with a new data center in Germany.