This story was written by Sramana Mitra.
At the cusp of SaaS and content protection sits today's Deal Radar company, Redwood Shores, California-based iForem. It is a digital archiving company that delivers innovative tools for intellectual property (IP) and critical content protection based on its Automatic Retention Management (ARM) platform. iForem was conceptualized by Stephen A. Pieraldi, iForem's CEO, in 2006. Pieraldi's own experience of losing important information prompted him to create a unique way to safeguard it.
The company is a proponent of cloud computing and holds a provisional patent for Providing Digital Services in Perpetuity via Computer Implemented Systems and Methods. The technology enables iForem to provide security tokens to its customers, thereby increasing reliability and data portability in the cloud. This helps businesses ensure the integrity and perpetuity of their intellectual property in distributed cloud environments.
What makes iForem's services unique is its business model: customers pay once for a lifetime digital safe deposit box to a secure Virtual Vault(tm) with a guarantee that their data will always be available. The company's Active Record management starts at $20 (for a lifetime) for 20MB of vault space and is scalable up to $1,024 for 1GB.
iForem also offers four 'digital lifestyle tools': a perpetual password wallet, a licensing tracker, a recipe collector, and the digital lifestyle suite. The Perpetual Password Wallet provides a secure online location for web site names, URLs, user names and passwords, and the Licensing Tracker lets users organize and backup their software license information and activation codes. The Recipe Collector is a place for users to store their favorite recipes complete with author, details of ingredients, and directions. The Digital Lifestyle Suite includes all three tools and also has a contact manager, a journal, an inventory minder, and a receipt tracker. The three tools are priced at $9.95 each, and the Digital Lifestyle Suite is $29.95. The Recipe Collector is an unlikely option for most businesses, though!
The newest product to be built on the platform is Escrow Assured(tm), a tool that will allow businesses to safeguard intellectual property and associated digital content without the cost and complexity of a traditional escrow offering. Escrow Assured(tm), iForem's flagship software/IP escrow solution, is aimed at independent service vendors and large software publishers. Its software escrow solution is the world's only fully automated on-demand open escrow service and allows beneficiaries to be selected after the software (which includes open source code core modules) or IP is escrowed.
Escrow Assured is priced at $799 per code base, which includes one beneficiary. Each additional beneficiary is $29.95. The company follows a mixed revenue model: monthly fees for small deposit vaults and annual fees for Escrow Assured(tm) vaults. The vaults are complemented with SaaS services that are tied into each account set. The company also has a set of tiered development and affiliate sales programs that allow for white label revenue and sales channel reselling.
iForem has 30 customers, with the number of content organizer users growing monthly at the rate of 125%. The company did not provide the names of its customers or provide any revenue information. However, iForem did quote the Gartner Group's 2005 estimates of $6.5 billion for master data management (MDM) and $250 million for software escrow (SE) to give an idea of the software/IP escrow market size. However, Gartner's MDM estimate includes products that large enterprise software companies like SAP and Oracle sell, to organize master data inside of large corporations. Thus, I don't think MDM is the right category to bucket iForem under. In fact, from a positioning point of view, the best category for thecompany would be Infrastructure-as-a-Service (IaaS).
Pieraldi named channel and distribution as key aspects of his growth strategy, saying, "Consumer and mass market approaches have yet to yield market results and solid revenue traction. Take almost any social network as an example. The strategy of using and empowering partners, channels, and allowing them to use a platform expanding services and revenue is a much more solid business model. The go-to-market strategy has a consumer component, and you can sign up free at our web site, but the same basic tools used there in our platform drive the business model for our partners."
The company raised $2.5 million as seed capital from Gabriel Ventures. Pieraldi said that the company is looking to raise another $3 million in this quarter or the first quarter of 2009. He described his ideal investor as somebody who fully understands SaaS and software and is focused on the long tail consumer and not the handset markets.
I see this company as an internet licensing infrastructure play, and the best acquirer that comes to mind is Digital River which we recently covered in the stock analysis column.
*Trend Radar 2008: SaaS in the Enterprise
*Forbes Column: Deconstructing The Cloud
*Seven Reasons Why SaaS Would Be a Great Success
By Sramana Mitra