Austin Startup Wisegate Raises $4 Million For Expansion

By Lori Hawkins Austin American-Statesman.

Austin entrepreneur Sara Gates founded her startup Wisegate with the idea that senior IT professionals get the best business information from peers at other companies, instead of from market research reports.

Over the past three years, the company has built an invitation-only online community that is open only to senior technology managers (marketers and vendors can't join). The service provides matching capabilities so that members can sort content by their industry and meet people with specific experience in similar roles. The company generates revenue by selling memberships to its service.

A year and a half ago, the company raised $3 million from a syndicate of angel investors including Atlanta Technology Angels, Cowtown Angel Network, the Central Texas Angel Network and Golden Seeds. Prior to that it had raised $1 million from individual investors.

On Monday, Wisegate announced a new $4 million round led by Arcus Capital Partners with participation from previous investors.

"When we raised our first round, we were excited about our product, but we hadn't really validated it," Gates said. That investment "was about proving the product and proving you can sell it. We've done that."

The new money "will allow us to accelerate our growth. This is really about investing in sales, customer care and product marketing."

Prior to launching Wisegate, Gates was a vice president of identity management at Sun Microsystems. Before that she was director of product marketing at Austin-based Waveset Technologies, which was acquired by Sun Microsystems in 2004.

In addition to providing a discussion forum, Wisegate hosts live web sessions with members and facilitates one-on-one conversations between IT experts, which it then curates and makes available to subscribers.

The service generates revenue through subscription rates ranging from $10,000 for an individual membership to $25,000 to $50,000 for an annual group package. Renewal rates are at 90 percent, Gates said.

The 30-person company doesn't disclose how many participants it has, but companies and organizations with memberships include Brown University, City of Tampa, Samsung Research America and DynCorp International.

The company competes with market research firms such as Gartner Group, which conduct product reviews and track technology trends.

Ross Singletary, managing partner of Arcus Capital Partners, said, "The traditional analyst firm model of research and reporting cannot move at the pace of technology today, leaving a gap in the market that Wisegate's social and matching algorithms help to fill."

Wisegate doesn't share specific financial information, but Gates said the company is nearing profitability.

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