Varolii Rolls up $8M to Grow Communications Biz After Surviving the Great Recession

7/26/11Follow @curtwoodward

[Updated 11:15 am, see below] Varolii, an 11-year-old software company that handles customer and employee communications for big companies, has served as something of a barometer for the U.S. economy’s troubles over the past few years.

After generating double-digit sales growth in the mid-2000s and preparing for an $86 million IPO, Varolii had to back away from the public markets as the downturn took hold in mid-2008. Layoffs followed in 2009 and 2010, as the Great Recession and its aftermath walloped the ledgers of Varolii’s corporate customers.

Now, as the economy continues its long, slow recovery, Varolii is announcing some positive news: an $8 million round of growth financing from existing investors BlueRun Ventures, Draper Fisher Jurvetson, Institutional Venture Partners and InterWest Partners. It’s the first institutional money since 2002 for Varolii, which is based in Seattle and has a major satellite office in the Boston area.

New CEO David McCann, a former Microsoftie who took the helm at Varolii about four months ago, says it’s a strong vote of confidence that reflects the accelerated switch to cloud-based services expected from big corporations in the next couple of years.

“A lot of little fragile companies disappeared off the map” during the recession, McCann says. “We clearly have the revenue strength and the customer base that absolutely gave us the ability to withstand the downturn in 2009 and 2010.”

[Added info on Pawlak here] Varolii was founded in 2000 under a different name by MIT grads Scott Sikora and Michael Ho, and Ken Pawlak, who now works in Microsoft’s Startup Business Group. It makes software tools for text messaging, voicemail and email that help businesses reach customers and employees. The client roster is about 400 deep, and includes large banks, utilities, airlines, and health insurers.

McCann says he plans to use the cash infusion to speed up efforts in the smartphone arena, including extension of Varolii’s current communications platform to include Android and … Next Page »

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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