Encover - Article

	Home \| Contact Us

Service-Contract Tech Firm Encover Raises $11M In Second Round
By Alexander Oveis, May 14th, 2004

Encover, which provides technology to help companies manage their service contracts, has secured $11 million in an oversubscribed Series C round, the company's second round of institutional financing.

New investor DCM - Doll Capital Management led the round. Sigma Partners, which invested $6 million in July 2002 in Encover's Series B round, returned to participate in this round.

Fundraising for the round, which closed on April 16, began Jan. 15. The company had set an initial target of between $6 million and $8 million.

President and Chief Executive Chip Overstreet said the financing would be used to further develop the company's technology and to build out its service delivery capability.

Encover provides a software product supplemented by a service offering. The company's flagship product, the Encover Service Application, helps customers market, sell and manage their outsource services. In addition to the software product, Encover's services organization helps customers to sell and market their own outsourced offerings.

Eastman Kodak Co., Xerox Corp., Juniper Networks Inc. and Enterasys Networks Inc. are among the company's dozen customers. For Xerox, Encover handles the company's service contracts. Overstreet said its team of service representatives is responsible for the sale of Xerox's service contracts. Encover speaks directly with Xerox's customers, and acts as an extension of the Xerox organization, with Xerox email addresses and Xerox telephone numbers.

The full service and software offering was launched last August, when Encover acquired Movana, an acquisition that "augmented our technology to complete the service offering," Overstreet said.

Encover currently has 35 employees. Expansions are planned for the services organization, the sales and marketing and the research and development teams. Overstreet expects the company to have close to 100 employees within the next 18 months.

The company also said Tom Blaisdell, general partner at Doll Capital, has joined Encover's board. The board now consists of Peter Solvik, former chief information officer of Cisco Systems and managing director at Sigma Partners; Sridhar Krishnan, Encover's chairman and chief technology officer; Blaisdell; and Overstreet.

Blaisdell compared the investment in Encover to Doll Capital's 2003 investment in HireRight, a provider of web-based employment screening services. Both companies, Blaisdell said, are at the heart of the "core vs. context" struggle. That is, by providing outsourced services for payroll, background screening or other peripheral tasks - the "context" - both companies enable their customers to focus more on making widgets - their "core." Blaisdell believes that outsourced services is a commonly overlooked revenue opportunity for many companies.

Encover was founded in 2001 by Sridhar Krishnan, the architect behind Cisco's Service Contract Center. Krishnan raised $1 million from friends and family soon after founding the company. In 2002, Peter Solvik, who was a colleague of Krishnan's at Cisco, made his first investment as managing director of Sigma Partners in Encover.

Overstreet said the $11 million in new capital would be "sufficient to meet the current business objectives."

back