Bluestone Raises $25M in Final Round

Ebay and E*Trade know how catastrophic it can be when an e-commerce company’s Web sites shut down. Potentially coming to the rescue, Bluestone Software Inc. of Mount Laurel, N.J., designs software that allows e-commerce retailers to repair technological glitches without shutting down their sites.

Last month, the company received $25 million in its third round of venture financing, which Chief Executive Kevin Kilroy said would be the company’s last private round.

The deal, which was placed by Deutsche Banc Alex. Brown, attracted 18 new investors to the company in addition to commitments from returning investors G.E. Equity, Patricof & Co. and Adams Capital.

First-time investors include Van Wagoner Capital Management Inc., Seligman’s Communications & Information Fund, Williams, Jones and Associates, Oppenheimer Funds Inc., Chelsey Capital Management, CSK Venture Capital, Essex Investment Management Co., FGII Ventures, Odyssey Capital, Riggs Capital Partners, Willow and Co., St. George Capital, Tyson Street Partners, New Venturetec, Westfield Capital Management, and Winfield Capital Corp. The company would not disclose further details of the deal.

“We were grossly oversubscribed by 3.5X,” Kilroy said. “I am pleased with the number of crossover funds we were able to attract.”

In addition to providing software to e-commerce sites, such as Life Magazine and Just For Feet, Bluestone markets its software to companies in the telecommunications, financial services and pharmaceutical industries.

Proceeds from the financing will go toward continued product development, Bluestone has issued two products per year since 1997. Additional proceeds will be allocated for global sales and marketing efforts.

“We have been besieged by a number of international clients, but currently have no international offices,” Kilroy said.

Although no board seats were given to investors in the deal, Bluestone recruited Platinum Technology Inc. founder Andrew Flipowski to its board June 15. Platinum is the eighth largest software company in the world.

Kilroy, who was promoted from president to CEO on June 16, would not comment on when Bluestone might file for an initial public offering.