HyperQuality connects with $10M

By: Clifford Carlsen
Submitted: 2008-08-20 18:00:35
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HyperQuality Inc. raised $10 million in a Series B round of financing led by Ignition Partners of Bellevue, Wash., to support growth of outsourced Call-Center monitoring services and take the Company to profitability by the end of this year.

Including first-round investors Miramar Venture Partners of Corona del Mar, Calif., Rustic Canyon Partners of Santa Monica, Calif., and Seattle-based Divergent Ventures LLC, the round brings total equity investment in the Four-year old Company to $15.5 Million.

The new capital will allow Seattle-based HyperQuality to boost capacity at its Haryana, India, fulfillment facility, which currently has 450 Employees, and to expand the Company's U.S. Marketing efforts as it targets Fortune 1000 companies.

HyperQuality Chief Financial Officer Carol Criner said the Company began fundraising for the current round in August, and narrowed its focus rather quickly before closing the round Dec. 12. She said HyperQuality considered bringing in an East Coast or European investor to broaden regional business contacts, but in the end opted to take on local investor Ignition Partners to take advantage of more hands-on business and technology expertise.

The deal puts a post-money valuation of $34 Million on the Company, up 50% from HyperQuality's $5.5 Million Series.

A round of June 2005, and is positioned as the Company's final private round. HyperQuality monitors Telephone, E-mail and chat interactions for Customers including AOL LLC, Allconnect, Carlson Leisure Travel Services, Covad Communications, Lillian Vernon Corp. and Time Warner Cable Inc., which use its services to improve performance of more than 35,600 Agents from 136 Call Centers. CEO Howard Lee said the new funding will give the Company resources not only to augment the level of service it provides, but to introduce products and technology that will have an impact on the industry for years to come.

Michael Song, a partner with Rustic Canyon, said HyperQuality had built its core technology and established a handful of early Customers by the time of the first investment round, but that the latest round reflects its success in building its outsourced model. He said Rustic Canyon had experience with offshore outsourcing from its investment in now publicly- traded PeopleSupport Inc. of Los Angeles, and had been looking at technology in the quality assurance area.

"Quality metrics are increasingly important with outsourcing, particularly offshore, and we weren't seeing that it was being addressed," Song said. "They had a very good business model with a core technology and strong analytical tools and a couple of Customers, but between then and now they have tripled revenues and banked a lot of big Customers." (Rustic Canyon is an investor in The Deal LLC).

Jon Roberts, founder of Ignition, said that Call Centers are becoming more important to Companies' core mission and that he believes HyperQuality is a leader in quality assurance and poised for significant short- and long-term growth." Criner said that in addition to adding Employees to handle increased business volume, HyperQuality is developing technology for greater automation of call monitoring. She said the Company expects to add voice recognition software and other technology to help identify calls for emotion detection and assurance that key phrases and certain attributes of clients' particular business are addressed in each call.

HyperQuality did not use an outside financial adviser in putting the round together, and called on the legal services of David Clark of Perkins Coie LLP in Seattle.

Craig Sherman of Wilson, Sonsini, Goodrich & Rosati PC in Seattle represented the investors.

Article source: Expert Articles