Smilebox Acquired by IncrediMail for $25M

8/1/11Follow @curtwoodward

[Updated at 11:10 am PT] Redmond, WA-based photo software company Smilebox, which lets users turn their photos into electronic greeting cards, scrapbooks, and photo albums, or even physical printouts, is being acquired by Israeli digital media company IncrediMail (NASDAQ: MAIL) for $25 million, with the possibility of another $15 million if the acquisition hits performance milestones.

Smilebox was founded in 2005, and headed by Andrew Wright, who was the first employee on the RealArcade games unit at Seattle’s RealNetworks. He’s also a former Microsoftie. Smilebox is a bit of a throwback amid the current glut of photo-sharing startups—and not just because it was founded six years ago.

[Corrects target customer as IncrediMail's] A big focus for Smilebox is targeting old-school sounding activities like creating DVDs or printing out photo products at retail stores, and the company has cut partnership deals with Hallmark and Sam’s Club for those services. Within IncrediMail, its target customer won’t exactly be the hip early adopter or on-the-go young consumer. It sounds a little more like your aunt or grandma, a group that Wright describes in today’s news release as “second-wave technology adopters, in particular women.”

[Adds CEO comment] Wright says IncrediMail made a lot of sense as a parent company, particularly because of its size. Although it’s publicly traded, IncrediMail isn’t a behemoth tech company that would swallow Smilebox whole and spread its technology around—but it still provides resources to help continue growing the product, with plans for a mobile version to be released in the next month or so.

“Smilebox is a very, very key component of the overall mix. As we’re successful, it will really help to drive the overall company,” Wright says. “It’s different than some other things that we could be involved in, where  it’s a big company and we’re a very small percentage. We’re fundamental to this, and we can really help to drive the future.”

Smilebox has raised about $14.4 million over the years, from my tally of SEC filings (John Cook over at GeekWire says it’s about $16 million, so I could be missing something in there). IncrediMail expects its new unit to generate more than $15 million in sales in 2012. Smilebox’s investors are Bessemer Venture Partners, Frazier Technology Ventures,  and a long list of angels, including Rob Glaser from RealNetworks, Paul Thelen from Big Fish Games, and Garr Godfrey from GameHouse.

IncrediMail says it doesn’t expect any big changes for the Smilebox team, which will continue to be based in Redmond and currently has about 50 employees.

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

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