Ecircles.com Raises $18M Plans IPO

In what will likely be its final round of private equity financing prior to an initial public offering, community Web site developer Ecircles.com recently raised $18 million in its third round of venture funding.

Strategic investor Adobe Systems led the investment in the San Mateo, Calif.-based company. The round also saw a first-time investment from Nexus Group LLC. @Ventures, which led Ecircles’ $6 million second venture round in March, returned at pro rata, as did existing investors Interactive Minds, New Vista Capital and Pareto Partners (PEW Mar. 22, p. 9).

“Adobe wanted to make a strategic investment, and that was the impetus for the round,” said Chief Executive Prescott Lee. “We are working with Adobe to provide an exclusive community for digital imaging photo sharing with photography and video.”

Ecircles and Adobe have entered into a joint-venture to launch ActiveShare.com, a desktop utility that captures and manages digital images, said Adobe Partner Bruce Chizen. As part of the deal, Chizen has joined Ecircle’s board of directors.

Ecircles allows users to create private communication circles where they exchange text, photographic images, MP3 Audio and, eventually, video free of charge over the Internet. Unlike similar services by Yahoo! and Excite that create communities of strangers with similar interests, Ecircles allows users to program and confine their own communities with people they already know.

Lee, who founded Ecircles in May 1998, said he conceived the company after having a difficult time forming his own online community.

“I was trying to put together a family reunion, and it was a real pain in the butt,” he said. “Developing a web page was a great way to communicate to everybody, but it was hard for people to communicate with me.”

Fourteen months later, Lee said he now has several underwriters that would like to communicate with him.