KVS Collars $17M Round

Riding high on the recent wave of laws and regulations surrounding data storage and archiving, email archiving startup KVS Inc. has landed another $17 million in funding, bringing the total investment to date in the company to $37 million (see KVS Lands $17M in Funding).

Two new investors, Index Ventures and FTVentures, led the round, which is KVSs third. The Berkshire, U.K., company’s previous investors, which include Cazenove Private Equity, Greenaap Consulting Ltd., Lehman Brothers Venture Capital Group, and Mosaic Private Equity, also joined in on the round.

“We’re in a good space, we’ve been growing, so companies had been watching us,” says Mary Kay Roberto, KVS’s vice president and general manager for North America. She explains that the company had received many venture capital proposals, deciding to take Index Ventures and FTVentures up on their offers in late spring this year.

The main reason so many VC firms have been interested in pumping their money into KVS, Roberto says, is that the company so clearly addresses the growing regulatory demands for data retention and deletion. In an environment where the amount of corporate emails continues to skyrocket – expected to reach 60 billion per day by 2006, according to KVS – and new and reinforced laws and regulations like the Sarbanes-Oxley Act of 2002 and HIPAA compel companies to store emails and other documents for longer, that means huge market potential, she says.

Masha Khmargseva, an analyst with The Radicati Group Inc., agrees. “Regulatory compliance issues are becoming more and more important,” she says. “We project that this market will grow pretty fast over next four years.” The Radicati Group forecasts that revenues for email archiving vendors will reach $126 million by the end of this year, growing to $1 billion by 2007.