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CapLinked, Backed By Thiel and McClure, Gains Traction

Deal room software isn’t new. Companies and investors have long had online places to securely manage their due diligence, update investors, and bring in other interested parties. IntraLinks, a publicly traded New York company that is used by one million people every day, charges subscribers thousands of dollars each month to host their most critical information exchanges.

CapLinked, an L.A.-based startup backed by Peter Thiel and Dave McClure, wants to put those places out of business. At the very least, it wants to snag the many companies and investors who can’t — or won’t — pay top dollar to transact their business online in a safe, regulatory compliant environment.

After 15 months in business, CapLinked’s prospects seem promising, too. The company is announcing this morning that 90,000 investors, entrepreneurs, and related service professionals have signed up for the service so far, and it says 18,000 of them are using the service actively. Soon, says one of the company’s investors, expect CapLinked to announce additional financing, too. (CapLinked wouldn’t comment on a round, but back in February, it closed on $900,000 in seed funding, including from Thiel, McClure and others.)

Why is CapLinked gaining traction? Founder and CEO Eric Jackson partly credits the company’s proprietary technology, which makes it easy for users to set up a virtual deal room, as well as provides them way to control information flow, tools to collect digital signatures, and so on. CapLinked has also integrated with LinkedIn’s API, enabling folks to more easily scour their business contacts for their funding needs. Plus, CapLinked in free, though it plans to introduce two additional pay-for models in the next several weeks, both of which will cost $100 or less per month.

The question is whether enough people need the service to turn it into a sustainable, profitable business. While Intralinks may be pricey, plenty of investors are making do with storage solutions on the other end of the spectrum, including Dropbox and, not to mention Google Docs and the online collaboration software of Basecamp.

Jackson acknowledges that “people have used [such platforms] in the past for this kind of functionality,” but says that “having something more targeted is really our objective. We’ve built in a lot of analytic and communications tools…So as much as I think the others are awesome platforms, it’s a little bit of a hack” to use them for deal processing.

To help potential customers figure out where the company fits in the grand scheme of thing, Jackson positions the company as complimentary to the popular Website AngelList, for example, which replaces pitch meetings with Internet-based matchmaking. “You can get your prospects over there, then set up a CapLinked account to download your term sheets or your cap table or whatever confidential information you want to store,” he says.

But CapLinked is also beginning to compete with AngelList. Specifically, CapLinked just announced DealRocket, a new “tool” that allows professional investors to access deals based on their stage, location, and other criterion. In other words, rather than strictly facilitate communications between entrepreneurs and investors who know one another, CapLinked will now facilitate new introductions as well, even while Jackson is quick to note that CapLinked isn’t a broker-dealer. “If an entrepreneur chooses to make his or her deal available, then investors will be able to find it. But we aren’t screening the deal flow beyond ensuring that it’s a real deal.”

Jackson says that unlike AngelList, which “works really well for super angels,” DealRocket is “meant more for institutions: PE funds, hedge funds, VCs.” (In fact, plenty of VCs, and probably hedge funds, use AngelList too.)

Either way, CapLinked is slowly but surely extending its reach. Jackson says tech-related deals now represent 30 percent of what goes on in CapLinked’s deal rooms, down from 50 percent earlier this year, as other industries grow increasingly represented. Among them are real estate (6 percent of deals), energy (5 percent) and financial services (4 percent). (The average deal size is $9.5 million.)

As interestingly, a third of the company’s traffic is suddenly coming from overseas. Most of that foreign traffic is coming from India, but investors and entrepreneurs from Japan, the U.K., and continental Europe are also signing up, according to the company. It’s an “interesting” trend, says Jackson, who hasn’t paid for any advertising yet. “We haven’t pursued any foreign press, and the site is English language only.”