Mzinga’s Tempest of Growth Sweeps Up Prospero

3/3/08Follow @wroush

Mzinga, the Burlington, MA, online community management company we profiled in December, announced today that it has raised $32.5 million in new venture financing and acquired Littleton, MA-based Prospero. Like Mzinga, Prospero sells online community applications such as message boards, blogs, wikis, polls, and chat interfaces that are used by a growing number of companies to improve interactions with customers.

Mzinga is itself the product of a recent merger between community management company Shared Insights and knowledge management company Knowledge Planet; most of the company’s leadership team came from a third company, Intranets.com. The 150-employee firm says that more than 125 enterprise customers are using its software for external customer communities, internal employee communities, and online employee training, including big names such as ABC, AOL, ESPN, Chevron, and Johnson & Johnson.

The funding round was led by W Capital Partners of New York, with participation by institutional investors Bluecrest Capital Finance, LP, GE Equity, and Knowledge Industries. Members of Mzinga’s management team also pitched in. In a press release, Mzinga (the name is Swahili for “beehive”) said it would use the new funding to “accelerate product development in response to increased demand, expand into new market segments, and increase sales and marketing investments.”

And it’s using an unspecified portion of the funding round to buy Prospero, a former competitor whose “CommunityCM” software-as-a-service platform lets companies integrate user-generated content such as message board comments and ratings and reviews into their main websites. (For an example of Prospero’s platform in action, see BusinessWeek’s user forums.) DelphiForums, which hosts hundreds of free message boards on general topics, and Talk City, a collection of Java-driven chat rooms, are also part of Prospero.

While there will undoubtedly be some synergies between the two companies’ existing services, there’s also a lot of overlap, which makes the Prospero acquisition look like a pretty cut-and-dried case of industry consolidation, with one larger and better-funded company swallowing up a competitor. In its release, Mzinga said the acquisition establishes it as “the clear leader in business social media over an array of niche providers.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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