Having been founded in 1999, Zilliant is hard to categorize as a startup anymore. The company creates the leading software in an enterprise niche called pricing optimization and margin management. Most people don’t really think of pricing as an elastic thing. An item’s price is the price. But even Walmart (the epitome of brick and mortar) changes prices on some items daily, based upon sales and competitive intelligence. So why would you not think that internet retailers are interested in maximizing pricing as well?

There must be many ways to maximize price (and therefore margin) if you can understand something about a web visitor. What time of day are they shopping? What other products have they looked at? Which products are already in their shopping cart? How did they arrive at our website? These are some things to think about when pricing products dynamically, but I’m sure Zilliant’s products are not just focused on realtime web.

The company announced that is just completed $13M in financing from existing investors SMH Private Equity Group, ABS Ventures, Austin Ventures, and Trellis Partners. Doing some research shows that their last round in 2007 was Series F, so this must be Series G. Word on the street is that the company is growing and profitable. So why raise money?

We have no inside information, but that never keeps us from speculating! A couple things could be happening. The company could be preparing for an IPO. It’s common for even profitable companies to raise a large round in preparation for an IPO. The cash looks good on the balance sheet, and venture investors want to pile on money at low valuations before the valuation increases by 10x as a public stock. Secondly, the company could be in a more rapid growth mode than their cash flow and previous investment could handle. Or both things could be happening. It’s always good to go public on the back of a solid growth trend, and venture investors from the early days want to close out their 2000 – 2002 era funds by liquidating their holdings and completing their obligations to their limited partners (LP’s).

“Our customers are experiencing significant improvement in their financial performance using our price optimization solutions,” said Greg Peters, CEO, Zilliant. “This financial commitment from our investors will help us capitalize on increased market demand, and accelerate our market lead.”