RDM hoping for private equity raise

There's been a lot of action in the digital signage M&A and equity financing space recently, what with the Wireless Ronin IPO (which still baffles me), SeeSaw Networks raising a bunch of cash, the GSBC/m-cast/Wallflower deal, the Ripple network raise, and probably a host of others that I'm forgetting about right now, and it looks like the trend may continue, at least if digital signage software company Real Digital Media gets its wish. According to this article from TechJournal:

On the heels of closing a substantial equity investment last year, Real Digital Media, which sells software and players for digital signs, is preparing for its first institutional round. The company seeks from $3 million to $5 million to ramp up its assault in a fragmented space, says CEO Ken Goldberg.

They expect to be cash flow positive by the end of summer 2007, according to Goldberg. I was kind of surprised that they weren't already profitable, especially after a startup raise of $1M and another "substantial" raise in 2006 to keep them funded while they grew their customer base.

This raise could indicate the private equity market's taste for digital signage software companies, since we know from Wireless Ronin that the public market was willing to take the risk of funding an unprofitable company in a very early-stage market. While private equity tends to be a bit more conservative (especially in terms of valuation), it's a much more traditional funding source for small companies, which is practically everybody in the retail media space right now (with a few notable exceptions, of course).

Also of interest (though I doubt we'll ever find out), is what RDM is really selling their hardware, software and services for. While we know their list prices are about $800-$1200 for hardware media players and about $30-$40/month for their hosted service, the math doesn't add up right now. Given they're running well in excess of 1,000 locations (they have that many between the 300 VISI/Lab Corp sites and the sites they're working on with Kyle Private Networks), it seems like it should be more than enough to keep a company of only 9 people profitable. So either they're paying themselves a LOT, or they're giving out significant discounts to win these deals.

Tags: digital signage software, RDM, Real Digital Media, venture capital, private equity