June appears to be the month for social networks to announce new funding. The latest is Lithium Technologies, which today announced that it has closed a $12 million series B round. Lithium, a provider of enterprise communities driven via software as a service (SaaS), joins LinkedIn, Twitter, Jaxtr and others, which all this month created a splash with their respective financial news. Lithium currently has more than 100 enterprise-class customers including AT&T, Dell, Sony Playstation and PayPal.
The company's most recent funding round was led by Benchmark Capital, joining Emergence Capital and Shasta Ventures, which co-led a $9 million series A round last year. Benchmark, which boasts an impressive portfolio of both technology and consumer companies, is said to have evaluated several of Lithium's competitors, but decided to invest in the Emeryville, Calif.-based company due to the strength of the company's enterprise customer engagement model through external communities.
“We are seeing a radical transformation in the ways organizations interact with customers, resulting in benefits not only to bottom-line support costs but to gains in revenue generation, product innovation and brand equity, to name a few," said Peter Fenton, partner, Benchmark Capital.
Lithium CEO and founder Lyle Fong first launched Lithium in late 2001, building the business on the same community engagement principles that proved successful for his previous venture, Gamers.com. According to Fong the Lithium business idea grew from a request from a Dell executive -- then a power Gamers.com user -- who wanted to leverage the site's online gaming mechanics to build a customer community of his own.
"First we had Dell, then came Sony Playstation, and then came Roxio -- all paying us on a SaaS model. It grew from there," Fong said. "For five years we were grew the company organically and we were profitable without raising funding. But as we further understood the benefits of social networking for enterprises, we wanted to get in a better position to pursue the market opportunity. This is how we got to our series A. With our series B we want to invest more heavily in the technology. With so many small companies coming out with ideas for social networks we want our innovation to rise above the noise."
Lithium's "engagement communities" are essentially branded, custom user-powered social networks for companies who want to encourage communication with and among their customers. These communities can include RSS feeds, polls, integrated search, private messaging as well as interactive chat and blogs, leveraging the principles of social networking to improve customer service as well as branding and marketing.
"We're helping enterprises navigate the social media landscape," Fong said. "A lot of companies realize there are conversations happening about their brand and with our communities they can participate in those conversations by using forums, blogs and social networks. Our customers are gaining benefits they didn't expect as their customers have become their most valuable evangelists."