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Bangalore: Online software product start-up Capillary Technologies has raised $14 million from existing investors Sequoia Capital and Norwest Venture Partners (NVP).

The company has raised a total of over $30 million, including the current Series B round of funds which it plans to use for marketing, to forge new partnerships with brands across the globe and build new products specifically for South East Asia and India.

“Unlike the rest of the world where products are going from online back to offline, Asia is still in the process of taking such retailing from offline to online. We are going to build some interesting products to help this transition," said Aneesh Reddy, co-founder and chief executive officer of Capillary Technologies.

He said South East Asia and India jointly contribute more than 50% of the company’s revenue.

The Bangalore-based start-up was founded in 2008 by three IIT-Kharagpur friends--Reddy, Krishna Mehra, and Ajay Modani.

Their core product, InTouch, gathers information from customers and uses predictive analysis to give them customised offers, etc. The information resides on the cloud (metaphor for the Internet), and the interaction is built around text messages.

“The strength of Capillary’s solution is its ability to deliver immediate business results. Also the company has demonstrated that it can scale up successfully and profitably by focusing on a segment that has been underserved by other more expensive and complex solutions," said Shailesh Lakhani, principal, Sequoia Capital.

Capillary also recently launched an Intelligent Customer Engagement (ICE) software suite that offers solutions to help retail marketers engage with customers on social networking sites.

“We did not raise a huge round because some of our geographies are giving us enough revenue, and we believe in raising enough funding to last us 24 months, nothing more,“ Reddy said.

He added that the market for such software is estimated to be worth around $500 million and is growing at 20% annually.

But the market is highly competitive, and customer management solutions in most developed markets are typically offered by established companies such as SAP AG and Oracle Corp..

“As competition is intensifying, people are building more and more software to understand customer behaviour. This is a wave, and there are many technology companies like Capillary and others who are coming out of it," said Jaideep Mehta, vice president and general manager, South Asia, International Data Corporation.

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