Dynamicsoft Hears $40M Mezz Deal

Dynamicsoft Inc. closed a $40 million mezzanine round of venture financing last week, readying the back-end voice-enabling technology provider for entry into the public markets.

UBS Capital, U.S. Bancorp Piper Jaffray and The Sprout Group co-led the deal and were joined by existing investors ComVentures and Vantage Point Venture Partners.

Before the East Hanover, N.J.-based company will set an initial public offering date, or even register with the SEC, it must earn a number of customer wins, pass certain design goals, and meet certain financial goals, said co-founder Jim Nelson.

Even so, Dynamicsoft’s roster of venture investors has pointed the company toward a public offering. Not only do ComVentures and Vantage Point, along with the others, give the company access to any number of complementary portfolio companies, but UBS’s affiliation with investment bank UBS Warburg and Donaldson, Lufkin & Jenrette’s close affiliation with The Sprout Group may provide and entree to those firm’s syndicate desks.

“Markets change and companies evolve over time,” Nelson said. “It looks like this will be our last round of private money.”

Neither UBS Capital nor the Sprout Group could be reached for comment.

In the meantime, the capital will be earmarked for overall growth as Dynamicsoft builds out its employee base alongside its client roster, and develops a sales and marketing effort to complement its product development.

The company will also direct some of the recently raised capital toward strategic partnerships and alliances.

The company has already announced partnerships to deploy its suite of voice-enabling products with communications applications service providers like eStara, in order to create voice-driven customer and sales services for e-commerce portals

Dynamicsoft will move toward strategic alliances with communications application service providers like Firetalk Communications. The company has already announced a partnership with Firetalk and has existing relationships with the likes of fiber optic networker Level 3 Communications Inc. and AduroNet.

Dynamicsoft had previously been in the private equity market with a $6 million Series A deal last October and, before that, with an angel round for an undisclosed amount in February, 1998.