Spam Blocker Chomps Email Archiver

Two privately held service providers that first explored a partnership ended up with an acquisition deal today when FrontBridge Technologies Inc. purchased MessageRite Inc.

MessageRites managed email and instant messaging services store customers’ incoming, outgoing, and internal messages in its data center. MessageRite will roll into FrontBridge’s services, which scan inbound and outbound mail for spam or viruses, rerouting mail if a server goes down.

The purchase price was not disclosed, but FrontBridge closed a $10 million funding round August 2 that execs said would go toward acquisitions and international expansion.

MessageRite’s handful of employees will move up from Irvine, Calif., to FrontBridge’s Marina Del Rey HeadQuarters, bringing FrontBridge’s HeadCount to more than 130. MessageRite founder and CEO Kevin Merritt becomes FrontBridge’s VP of compliance and archiving. FrontBridge CEO Steve Jillings will head up the merged company.

Merritt says he approached Jillings a few months ago about forging an OEM deal, and the CEOs decided a merger would make more sense. “We saw compelling reasons to put the companies together,” Merritt says. “Our roadmaps were identical in a lot of ways, and we knew we would be head-to-head competitors if we weren’t strong partners -- or more.”The competitive landscape is crowded. MessageRite directly competes with services from Akonix Systems Inc., FaceTime Communications Inc., KVS Inc., iLumin Software Services Inc., IMlogic Inc., Iron Mountain Inc. (NYSE: IRM), and Zantaz Inc [ed. note: which is not an antidepressant]. Although it has some success selling its services, it was clear that MessageRite was too small to survive on its own.

“The email archiving space is exploding, and we need to be out there capturing customers fast,” Merritt says.

Acquisitions and partnerships have been common since last fall among software and services companies looking to compete in a market driven by compliance. Some of the deals have been between bigger guys and startups, but many have been smaller companies combining forces. (See HP Buys Archive Guys, Connected Gets Into Archive, Zantaz Makes Compliance Buy, Zantaz Buys Educom, Connected Gets Into Archive, iLumin, Tumbleweed Partner, FaceTime Communications, and FaceTime Extends Compliance Program.)

Merritt says the frequent partnerships are a result of customers looking for integrated services in order to comply with new regulations. “Executives don’t want to buy these services from five or six vendors and cobble them together,” Merritt says.

Merritt says privately funded MessageRite was cashflow positive last quarter, and most of its 40 customers are financial services companies that buy direct. Post merger, MessageRite will no longer sell under its brand. Its services will be sold as FrontBridge Email and IM Archiving.Venture-backed FrontBridge sells primarily through OEMs, including VeriSign Inc. (Nasdaq: VRSN) and Sprint Corp. (NYSE: FON). FrontBridge and MessageRite have a few common customers, including Roth Capital Partners.

FrontBridge has received $28 million over four funding rounds. Focus Ventures led its most recent round along with previous investors Sierra Ventures and BA Venture Partners.

— Dave Raffo, Senior Editor, Byte and Switch