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Mu Sigma Lands Big Money For Big Data

Some of the world’s biggest corporations can’t figure out the data deluge on their own, and they’re turning to a start-up with an unusual business model for help.

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In one of the largest investments yet in a data analytics company, Mu Sigma has raised an additional $108 million to help its dozens of Fortune 500 clients make sense of the vast amounts of data being produced online.

The Series C funding round was led by General Atlantic, with Sequoia Capital, a current investor, raising its stake. Sequoia had invested $25 million in Mu Sigma in June.

Part of the new money will be used to buy shares back from existing shareholders, although Mu Sigma isn’t saying how much of the money will go toward that purpose.

Founder and Chief Executive Dhiraj Rajaram said Mu Sigma is profitable and will use the new money for more growth, both by acquiring new customers and by developing more services for its current ones. The company specializes in problems involving marketing, supply chain and risk analytics across nine industries. Revenue between 2008 and 2010 grew by 886%, the company said.

“We believe we are painting on a very large canvas,” Rajaram said. “…There cannot be any business that will not be impacted by analytics and decision science, and there’s a lot more to be done.”

Mu Sigma, headquartered in Chicago with a delivery center in Bangalore, employs about 1,500 people, up from about 1,200 in June. The company hires people who have attended the best schools in India or the U.S. and puts them through a three-month training program called Mu Sigma University that teaches the basics of consulting, applied math, data modeling, statistics, economics and so on, in what amounts to a “mini-MBA program for the quantitatively inclined,” Rajaram told VentureWire in June.

These employees then help Mu Sigma’s corporate customers learn to use the pedabytes of data their companies are generating to run their businesses more effectively. Mu Sigma claims more than 50 Fortune 500 clients–it has helped a pharmaceutical company identify the best price points for drugs, and a cable company identify the best ways to retain customers and still make money, it said.

More than 100 Mu Sigma employees are devoted to working with various parts of Microsoft, which was Mu Sigma’s first customer and which named Mu Sigma its Preferred Vendor for Analytics in June.

One Microsoft manager, Jason Hoffman, Microsoft’s senior director of monetization for paid search, said Mu Sigma helps Microsoft rapidly shift resources to solve problems in online advertising, an emerging field where conditions can quickly change. For instance, Mu Sigma helped Microsoft model the combined search advertising marketplace for Microsoft and YahooInc. (Microsoft and Yahoo are online advertising partners).

“I think the fact that big data exists and that companies like Mu Sigma have appeared is an indicator of larger changes on the horizon for companies in spaces that have to compete based on that data,” Hoffman said, adding that Mu Sigma’s training course is providing a level of expertise not generally available, even in most universities.

“We’re not graduating a lot of these folks, and it concerns me deeply,” he said.

While the goal for any company is to achieve “data fine dining,” Hoffman added, where “the data is clean and nicely aggregated and appears in report form and does not require a lot of processing, I equate the realities of online data to being back in the kitchen with sharp knives and hot liquids.”

As part of the new funding, General Atlantic Chief Executive Bill Fordwill join Mu Sigma’s board. Ford said the firm can help Mu Sigma with introductions to global customers and with the growth that Mu Sigma is likely to experience given the explosion of corporate data.

“We can get (Mu Sigma) in front of the CEO or other senior business leader–CEOs get it, but they have to be educated on what a company like Mu Sigma can do,” Ford said.

Mu Sigma has now raised $150 million. Rajaram said he is not planning to raise more money and that an IPO is a possibility. Valuation is not disclosed. Other investors in Mu Sigma include FTV Capital.

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    • QUOTE: The company hires people who have attended the best schools in India or the U.S. and puts them through a three-month training program called Mu Sigma University that teaches the basics of consulting, applied math, data modeling, statistics, economics and so on, in what amounts to a “mini-MBA program for the quantitatively inclined,” Rajaram told VentureWire in June.

      The Mu Sigma University laboratories have the thickest smoke and the shiniest mirrors on six continents.

    • Nice piece… This is a large scale problem.. i face this everyday in my organization. Mu Sigma’s business model is intriguing.

    • The use of applied math in organizations is only going to increase. The use of multiple disciplines to solve problems in decision sciences will be an irreversible trend.

    • This is an amazing company to watch out for … solving a real problem that will only get bigger and bigger. Heard that they partner with more than 50 fortune 500 (many fortune 100) companies

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  • Produced by the editors of Dow Jones VentureWire, Venture Capital Dispatch tracks the fast-moving developments at the intersection of high-tech innovation and venture capital finance. Featuring lead editor Scott Austin and the VentureWire reporting team in the Silicon Valley, New York, Boston and Shanghai tech centers, Venture Capital Dispatch provides insight into the newest start-ups and latest trends in venture capital investing. Write us at VCdispatch@dowjones.com. For more information on Dow Jones products covering venture capital and other financial markets, go to www.fis.dowjones.com.

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