Friday, June 20, 2008

IMakeNews backer recaps with $20M in new funding

By Christopher Calnan

Nearly one year after Waltham-based e-marketing company iMakeNews Inc. revealed plans to seek a $30 million to $40 million recapitalization, the company’s first institutional investor cashed out while iMakeNews completed the recapitalization with nearly $21 million in financing.

Wakefield-based investor Brook Venture Partners sold its stake in iMake-News earlier this month as part of the new financing deal. North Bridge Growth Equity, an affiliate of North Bridge Venture Partners, led the recapitalization, officials said.

IMakeNews announced North Bridge’s investment without disclosing the amount. However, a U.S. Securities and Exchange Commission filing indicates an investment of $20.9 million.

In July 2007, iMakeNews CEO David Fish said the company planned a recapitalization to position itself to acquire at least one other like-sized company and to partially pay off investors. This week, Fish, through a company spokeswoman, declined to answer questions about iMakeNews. Brook Venture also declined to comment.

Founded in 1999, iMakeNews produces electronic advertisements, e-mail newsletters, temporary websites and blogs for marketers. It also tracks electronic marketing results.

Last year, Fish said the company had enlisted a consultant to identify potential acquisition targets, mirroring the eight-company growth-through-acquisition strategy he employed while operating Engage Technologies Inc. IMakeNews hasn’t reported any acquisitions since Fish was appointed CEO in 2004. However, in August 2007, iMakeNews reported a 77 percent increase in the number of small and midsize customers compared with 2006. Meanwhile, Waltham-based competitor Constant Contact Inc. raised $93 million during an October 2007 initial public offering.

North Bridge Growth Equity managing general partner Michael Pehl, who is listed in documents as a director at iMakeNews, didn’t return a telephone message seeking comment.

Recapitalizations often dilute the ownership of previous investors. But they can also reinvigorate management by providing new capital and strategic guidance, said Bradford Adams, managing director of investment bank TM Capital Corp. in Westwood.

Nationally, e-marketing revenue continues to grow, but the service provider industry is still fragmented, with no major players dominating the market, said Robert Fleming, CEO of the Westerly, R.I.-based eMarketing Association. Midsize companies represent the largest growth area for e-marketing services, he said.