Investor interest in social networking is spreading beyond consumer-oriented services such as Facebook and Twitter to start-ups targeting the social networking needs of businesses.
The latest beneficiary of this trend is Yammer, a San Francisco-based company started in September 2008 by former PayPal chief operating officer David Sacks.
Yammer just landed a huge $85 million round of venture funding, the Wall Street Journal reported, which, added to the four previous funding rounds, gives the company a total of $142 million in private capital.
The latest round was led by DFJ Growth, which was joined by previous investors Charles River Ventures and Founders Fund, along with newcomers Capricorn Investment Group, Khosla Ventures and Meritech Capital Partners.
Yammer announced in mid-January that it has exceeded 4 million corporate users of its enterprise social networks and tripled year-over-year sales.
The company claims that more than 85% of the Fortune 500 now have Yammer networks, including Thomson Reuters, Shell, Chevron, Nationwide and Ford Motor.
Companies such as Yammer and Jive serve the needs of large enterprises that want to leverage the power of social networking via content sharing, collaboration and customer interaction, but in a secure, manageable environment.
Yammer's business model is freemium-based. There's a bare-bones free service that offers only basic enterprise social networking and mobile access.
For $5 per month per user, customers get the above plus basic admin controls, basic support and services and integration with existing systems.
An "enterprise" plan covers all that and more and requires potential customers to contact Yammer for pricing, which I'm guessing is variable depending on the size of your enterprise.
Given that VCs eventually want to cash out big, and given the recent successful initial public offering from Yammer rival Jive Software, it's hard not to expect an IPO filing from Yammer in the not-too-distant future.
But Sacks tells the WSJ he's in no hurry for a public offering.
The new funding “is like an IPO without the headaches,” he said, adding that the start-up can now “stay private for quite some time.”
Sacks might want to check back with the board on that in a few months. Jive Software (NASDAQ: JIVE) raised $161 million in its December IPO and now is valued at $1.38 billion. Shares were offered on December 13 at $12; as of early Thursday afternoon they were at $22.72, a gain of 89%.
I'd say the VCs could live with those kinds of headaches.