There's Money Out There After AllThere's Money Out There After All

The capital markets aren't being kind to technology companies of late, but there are still some private equity funds out there. For proof, look no further than two little-known firms that last week closed impressive financing rounds: Storm Telecommunications and Blue Pumpkin Software Inc., which raised $35 million and $19.2 million, respectively.

Silicon Valley-based Blue Pumpkin, which makes workforce optimization software that helps companies improve customer interaction by ensuring that the right employees are in the right jobs, has now raised nearly $60 million. CEO Doron Aspitz says the most recent investors--CE Unterberg Towbin, J&W Seligman & Co., Liberty View Equity Partners, and Needham Capital Partners--were attracted to the return on investment that Blue Pumpkin's customers are realizing by using its software. Aspitz says SGI, for instance, reported a 3,000% return in six months and has achieved a 49% increase in productivity. "The investors believe this will be the next wave of productivity improvement on the enterprise level," he says.

While Blue Pumpkin's focus on efficiency is a good fit in a tight economy, Storm's fundraising is notable in a depressed telecom sector. Since its founding in 1998, the British supplier of optical networking services has raised $400 million, much of which came during a venture-backed management buyout last year. CFO Josh Joshi says most of the recent round of financing will be used to help fund the company's pending rollout of pan-European gigabit Ethernet services. Storm is also aggressively pushing its Lighting service, which provides U.S. customers with network access across a dozen major European cities.

Independent telecom analyst Jeff Kagan says raising so much money in the current telecom environment is a significant accomplishment that implies a strong combination of technology and connections. "There must be some fire where there's all that smoke," says Kagan. He says he wouldn't be surprised if Storm--about which he knows little--starts developing a higher profile, especially given the current dearth of "fun and interesting companies" in the telecom industry. But Kagan also cautions that with big players like AT&T and WorldCom charging into Europe to peddle networks, Storm has its work cut out for it.