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Northern Light Receives $35 Million in Funding, Prepares for Major Ad Campaign
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Posted On May 10, 1999
Northern Light Technology LLC (http://www.nlsearch.com) has announced that Hewlett-Packard Company (HP) and Reuters Group PLC are leading a $35 million equity investment in the Massachusetts-based research engine company. Attracting companies of this caliber and reputation—and deep pockets—is both a coup for Northern Light and a welcome resource to propel the company's ambitions to grow, prosper, and increase its brand recognition.

HP and Reuters have more than just a monetary-investment interest in the fast-growing company. Both companies expect to work closely with Northern Light to develop professional products that focus on vertical information markets, tapping NL's technological expertise and capabilities in integrated searching and information commerce, as well as its content arrangements. NL would probably host any resulting services and, of course, would continue to benefit from a revenue share of products that are developed.

HP is expected to work fairly quickly to take advantage of its new relationship with NL. First, NL will work with HP to incorporate HP's Internet printing technology and personal publishing software into its service to provide users with desktop-publishing quality from Web documents. HP has recently announced an updated version of its software, HP Web PrintSmart 2.0. The first version had been offered for free downloading from the HP site, and had received a very positive response.

Laura Cory, general manager of electronic publishing services for HP LaserJet Imaging Systems, said: "The investment in Northern Light is an important step in HP's strategy of building e-publishing services. HP evaluated a variety of partners in this area. We were impressed both by the broad range of content licensed by Northern Light as well as their integrated search capability across both their content and the Web. Northern Light's information commerce platform will complement HP's future e-services." Cory will be joining NL's board of directors as a result of the investment.

HP has been a busy company recently, following its March 2 announcement of its corporate restructuring. Tracking its company news items in late April yielded over 20 items for just a single day, many of which concerned partnering or joint ventures on e-commerce initiatives. Recently, HP had 122,800 employees worldwide, with total revenues of $47.1 billion in fiscal year 1998. While the investment in NL is probably small potatoes to HP, for NL it is a significant boost. NL is definitely playing with the big guys.

Reuters has not yet released any details or a timetable for new products. John Taysom, director of new business development for Reuters, said, "We expect Northern Light Technology will enable us to build industry-focused information products that are vertical portals." Taysom will also be joining NL's board of directors.

The London-based business information service has been labeled by one longtime industry observer as the "yo-yo" of strategic business policy in the information industry for its recent shifts in access and pricing policies. It will be interesting to see what emerges from the partnership with NL.

The investment in NL is part of Reuters' development program, which invests in new technology and content companies and identifies new market opportunities for Reuters. In fact, NL was one of four U.S. companies that Reuters just announced as investments through its Greenhouse Fund. The others are Aurigin Systems, Inc.; Persistence Software, Inc.; and Entegrity, Inc. These four join 13 other companies in the Fund, which includes Yahoo!, Infoseek Corporation, VeriSign, and Digimarc Corp., among others.

According to the description of the Fund: "Typically, Reuters owns less than 10 percent of each company and has a marketing agreement either to supply news and data through them to their customers or to make use of their technology. Often these technologies support new business models that Reuters is keen to learn about. The Greenhouse Fund, in effect, outsources some of the research and development that Reuters must undertake to remain at the forefront of electronic publishing and e-commerce in the Internet era."

I asked a Northern Light spokesperson if agreements like this presented any contractual problems with NL's content providers. According to NL, the majority of their content providers don't care about additional licensing, and see it as an opportunity to expand their markets. In fact, since "money talks," the recent influx of equity to NL may spur some "difficult" content providers to come on-board. Some of NL's agreements with providers specify that they be contacted about subsidiary licensing and that they retain veto rights.

With this latest round of financing, Northern Light has raised a total of $50 million in equity finance since it was founded in 1995 by Dataware Technologies, which now retains a 10 percent ownership. While HP and Reuters lead the initiative, other companies and investors also contributed to this second round of funding, including the Times Mirror Company; Leonard Riggio, the chairman and CEO of Barnes and Noble, Inc.; Andrew McKelvey, CEO of TMP Worldwide; and a number of others.

Tom Unterman, executive vice president and chief financial officer for Times Mirror Company, said: "In these times of the dumbing down of search engines into portals, the new corporate and individual investors in Northern Light recognize that best-of-class search tools make the experience of finding information on the Web more productive. Northern Light is demonstrating its capabilities as the leader in defining information commerce."

Ad Campaign

The newfound wealth is allowing NL to gear up for a major ad campaign, due to launch in the fall. Susan Stearns, director of enterprise marketing for NL, said the company is in the final stages of selecting a national advertising agency to spearhead the expansion plans. The process has whittled a field of 12 agencies down to three companies, two based in Boston and one in New York. The announcement is expected in mid-May. The company expects to start with a pilot in early summer and a full launch in the fall using a mix of media, probably including broadcast, radio, banner, and print. Stearns said they expect to budget $10 to $15 million in the first year. She noted that professional searchers and businesses are familiar with NL, but the average consumer is not. The goal of the campaign will be to increase general brand recognition of NL as a general search engine.

Stearns noted that, while they need to break out beyond professional searchers to the consumer market, they also intend to expand their corporate enterprise marketing efforts. Growing the business is the continuing objective. When asked if the company was planning for an IPO (Initial Public Offering), she said the focus would continue to be on growth, and that at this time the company did not need the pressures or distraction of reporting earnings to analysts and shareholders.

Shopping Cart

NL has also been testing an e-commerce enhancement with its enterprise customers. The company will continue beta testing Shopping Cart on nlresearch.com, its enterprise product, for a few more weeks, and work on adding customization features, and then make it generally available on nlsearch.com as well. The feature allows users to select multiple documents for purchase, place them in the Cart, and then have a single transaction. The Shopping Cart metaphor is comfortable and familiar to many Web users. It was popularized on Amazon.com and has been widely implemented elsewhere. According to Stearns, they examined existing e-commerce sites, studying user interfaces, workflow, and terminology, and then developed their own product in-house. They have received very positive feedback so far from their enterprise customers.

Gov.search Rollout

Finally, NL has been busy working with NTIS on its joint venture to provide one-stop access to U.S. federal government information. The site called gov.search has been in beta testing at Boeing and a number of government agencies. It is now ready to be launched officially on May 18 at the National Online Meeting in New York. Details of the joint venture, plans for the site, and pricing were discussed on p. 28-29 in the May issue of Information Today and in a NewsBreak on the ITI Web site.


Paula J. Hane is a freelance writer and editor covering the library and information industries. She was formerly Information Today, Inc.’s news bureau chief and editor of NewsBreaks.


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