Azuki Systems adds $4M in VC funding

Acton mobile video publishing company Azuki Systems Inc. has raised $4 million in an inside round of venture financing that brought back all its existing backers, including institutionals Kepha Partners of Waltham and Sigma Partners of Boston.

The financing was first reported Wednesday in a regulatory filing. CEO John Clancy today said it will be used to hire sales and marketing staff to sell the company’s mobile video publishing software and appliances into content publishing firms and network infrastructure providers. The company currently has near 50 employees and has raised so far $22 million, including the latest round, Clancy said.

The next phase of Azuki’s strategy will be to sell through channel partners like system integrators and network equipment makers, Clancy said – but until now it has focused on direct sales.
“Typically as a startup you have to go out there and earn it first directly to prove yourself,” he said. “We’re kind of cruising out of that phase now and into more of a hybrid/partner phase.”

Clancy declined to discuss the valuation on the round, which did not bring in new investors, or to specify Azuki’s revenue. However, he said the current round provides a “line of sight” to break-even, although the company may choose to raise further funds. “I think there could be the potential at some point to do a classic growth equity round with a new investor,” Clancy said.

Azuki, founded in 2007 by serial entrepreneur Cheng Wu (Acopia, Arrowpoint), raised $3 million in January to fund a push into mobile network infrastructure. In August, Clancy, formerly president at Iron Mountain Digital, joined as president and CEO, replacing former CEO Jim Ricotta. In November, the company repackaged its software into an appliance.