NetMagic raises $20M
TheDeal.com, February 12, 2008

NetMagic Solutions Pvt. Ltd. said Tuesday, Feb. 12, it raised $20 million in a Series B venture capital round that will allow the 10-year-old Indian-managed services provider to expand operations at home, while launching operations in the U.S. and other global markets.

Fidelity International Ltd. of India, investing from an internal late-stage growth capital vehicle, led the deal, which included Nexus India Capital, a cross-border fund that recently acquired its stake in NetMagic by purchasing the position of longtime investor eVentures India. The new round will allow the profitable company to continue to operate four outsourced data centers in India and to open a U.S. headquarters in Sunnyvale, Calif., to offer remote data center management services in other markets.

NetMagic CEO Sharad Sanghi said in a statement the new funding is an endorsement of the company's new road map for international expansion, which seeks to attract customers in finance, telecommunications, media and the Internet.

Sandip Gupta, NetMagic's U.S.-based president, said he joined the company last June as it prepared to commence operations in the U.S. and began fundraising with cross-border investors familiar with the company's operations. NetMagic was founded in 1998 and weathered the telecom downturn, operating two data centers that provide managed IT services for Indian companies. The company began a more aggressive expansion last year by opening two additional data centers.

NetMagic offers both shared and dedicated data center models, with remote services that customers can contract with either a specific number of devices, such as servers and network elements, or with a specific number of devices to monitor and manage their infrastructure remotely. The company's infrastructure management services include failure and prefailure notification, threshold alarms and statistical trend analyses.

Naren Gupta, a managing director with Nexus India, said the firm bought its position in NetMagic before putting money into the company, with an eye to helping it expand into the U.S. "They had talked before about expanding into the U.S., and our thesis is that they could be a leader in managed services," Gupta said. "They offer high-quality service capabilities in mission-critical applications that require a great deal of reliability at low cost, and we think they will emerge as a global provider of choice in the outsourced data center and remote infrastructure management space."

Sandip Gupta said he was enticed to join the company based on the platform NetMagic has established for managed services. Gupta was previously CEO of service provider automation software provider Ensim Corp. of Santa Clara, Calif.

Sandip Gupta said NetMagic raised the money at a fairly significant increase in valuation to its original round of funding from eVentures, but he would not disclose a post-money valuation for the deal. He said it is unlikely the company will raise additional money before returning to profitability and that the funding gives it a runway for aggressive expansion over the next two years.

NetMagic used no outside financial adviser for the latest round.

This article in its complete form appeared in the February 12, 2008 issue of thedeal.com. It also appeared on the periodical's online portal on the following URL. Click the following link to read the archived article in its full form as it was published.