SAP's VC arm invests in wiki company

SAP Ventures, the venture capital arm of German enterprise applications vendor SAP AG, has invested in social communications and wiki company Socialtext Inc., the U.S. startup announced Friday. Socialtext specializes in software and support for enterprises looking to set up their own internal wikis and weblogs.

The wiki concept of "open editing" is used in Web sites like free-content encyclopedia Wikipedia where anyone accessing the site can create, edit or annotate its Web pages.

Socialtext has just closed its Series B round of venture funding to the tune of US$4 million, according to Ross Mayfield, Socialtext chief executive officer and co-founder, speaking in a phone interview Friday.

The Series B funding was in two parts. The first investment of $3.1 million came in June. It was led by venture capital company Draper Fisher Jurvetson along with Omidyar Network, an investment group set up by Pierre Omidyar, the founder of eBay Inc., and his wife Pam. The second part saw SAP Ventures contribute $850,000, with the remaining $50,000 coming from the University Venture Fund (UVF).

With each financing, Socialtext has tried to include investors that are "a little bit different" from the norm, according to Mayfield. He pointed to both Omidyar Network, which focuses on investing in businesses that promote self empowerment, and UVF, where university students make investments in companies under the tutelage of top venture capitalists.

"SAP really does the opposite of what we do," Mayfield said. The vendor sells highly structured enterprise applications where users have to conform to the constraints of the software as opposed to Socialtext's unstructured wiki approach, he added.

"Three years ago the notion of wikis as enterprise software would have been laughable," Mayfield said. SAP investing in Socialtext further legitimizes the wiki technology, he added.

Jimmy Wales, the founder of Wikipedia, joined Socialtext's board of advisors earlier this week, according to Mayfield. He welcomed the addition of Wales, saying the real innovation of Wikipedia has been around community development not merely in generating content for the encyclopedia. "There are only so many real wiki experts," Mayfield said.