Baynote raises $13M, hires new CEO from SAP

Former SAP executive Doug Merritt has joined digital marketing company Baynote along with a Series C

Baynote, a recommendation, personalization and digital marketing optimization SaaS company, announced Wednesday morning that it has closed $13 million in Series C financing led by SingTel Innov8 with participation from all existing investors, including Hummer Winblad, Steamboat Ventures and JK&B Capital.

SingTel Innov8 is the corporate venture arm of Singapore Telecommunications (the SingTel Group), one of Baynote’s clients and one of Asia’s leading telecommunications companies, with 368 million mobile customers across Asia and Africa. To date, Baynote has raised $28 million in institutional investments.

Along with its new funding, Baynote also announced that former SAP executive Doug Merritt has been named president and CEO of the company, effective immediately. Former chief executive Mike Backlund will continue at Baynote as SVP of Worldwide Field Operations.

Baynote is working towards something they call “The Adaptive Web,” a more immersive online experience that predicts what the user wants from their Web surfing experience. By silently and anonymously observing user behavior on websites, the company can construct a knowledge base of statistics that accurately predicts what certain users are looking for or, for example, what kinds of articles they might want to read.

Yesterday, I had a chance to talk with a few of the company’s executives, and when our discussion inevitably turned to the effect of social media sites like Facebook and Twitter on digital marketing, Baynote’s VP of marketing Carlos Carvajal made a good point: by compiling behavioral statistics on Facebook pages for businesses, Baynote offers a solid complementary approach to social marketing.

“We don’t need you to write a Yelp review to know a certain restaurant is popular,” said Carvajal. They already know based on site visits or user interaction.

While all the connections made on sites like LinkedIn and Facebook are great, argued new CEO Doug Merritt, what they’re missing are precise “peer groups” of people with “a similar set of interests at this moment. Friend groups aren’t always the best ways to find similarities between people.”

While the company couldn’t quote exact numbers for me, 2010 was a record year for Baynote as revenues grew year-over-year revenues by approximately 75 percent. Merritt says yearly growth has fluctuated between 70 and 120 percent each year since the company was founded in 2005. The goal for 2011, of course, is to either meet or beat last year’s growth.

Baynote now employs 80 employees and serves over 200 customers and websites, including top-name brands like AT&T, Expedia, PayPal and VEVO. The new funding will be used to expand Baynote’s name and reputation worldwide.