ZANTAZ Succeeds at Compliance

In yet another sign that compliance has hit the big time, ZANTAZ has netted a cool $20 million in venture funding.

“This large capital investment should bode well for other email/enterprise messaging vendors by elevating compliance and records management to an even higher priority,” says Enterprise Storage Group analyst Peter Gerr, who predicted last year that compliance would be big — to the tune of up to $6 billion over the next four years.

“$20 million is a significant investment, and I don’t believe it would have been made without current demand being strong and future potential looking bright,” Gerr told Enterprise Storage Forum.

Indeed, ZANTAZ says it doubled its customer base in 2003 and grew revenue by nearly 300%.
The company also reports it has received $90 million in total funding to date and expects the latest round will be enough to carry it to profitability.

“ZANTAZ has been able to succeed where few others have,” says Gerr. The company’s solutions “go beyond simple email and message archiving and management, offering their customers litigation support and electronic record discovery support should they need it in the case of an inquest or audit.”

ZANTAZ, Sector, and Iron Mountain “are really the three main vendors who offer hosted email and messaging management and archiving for regulated organizations,” Gerr adds.

ZANTAZ claims it was first to market with email and IM compliance solutions for securities industry books and records retention, retrieval, and supervision requirements (SEC Rules 17a-3 and 17a-4; NASD Rules 2210, 3010, and 3110; and NYSE Rules 342 and 440). The start-up says it increased the throughput of its data restoration capacity by 60%, while completing a number of large-scale restoration and e-discovery projects.

The funding round was led by General Atlantic Partners, with participation from existing investors Athena Technology Ventures, ComVentures, Geneva Venture Partners, Novus Ventures, and Red Rock Ventures. General Atlantic Partners says ZANTAZ is “truly one-of-a-kind in the industry, providing an end-to-end, fully integrated solution that combines technology, infrastructure, and domain expertise, creating a unique capability and clear competitive advantage.”

ZANTAZ reports it will use the funding for internal development and strategic acquisition, to increase marketing and sales, and to build strategic alliances.

The barrier to entry for hosted services is high, according to Gerr, “and so the fact that all of ZANTAZ’s customers are hosted is a testament to their strength, but it might also be seen as an endorsement of outsourcing email management to a service provider.”

Hosted email management “makes a lot of sense for regulated companies,” says Gerr, particularly for small and medium-sized businesses.

ZANTAZ is also the IBM e-hosting group’s largest partner in the lucrative financial services industry. “This partnership with and endorsement by IBM should continue to serve ZANTAZ well and help them continue to grow their customer base and expand into new markets and industries,” Gerr says.

Gerr predicts that 2004 “will absolutely be another huge year for regulatory and compliance-related technologies, partnerships, and, I’m sure, a few new
high-profile violations.”

All of which should boost ZANTAZ’s business even more.

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