Two Seattle area venture capital firms have come together to back Appature, a Seattle startup that provides online marketing services to pharmaceutical, medical device and other health care companies.

Ignition Partners and Madrona Venture Group co-led the $3.5 million investment, the first time that profitable Appature has raised outside capital since it was founded by Kabir Shahani and Christopher Hahn in 2007. In an interview, Shahani said it was a difficult decision to take on venture financing.

"It was hard," said Shahani. "Not because we have any aversion to venture, but just because things have been working so well as it is. We have never taken a single dollar of outside capital, no angel, no nothing."

Despite the company's organic growth to date, Shahani said that the company wants to supercharge sales and marketing efforts heading into 2010.

"We went through a lot of cycles in terms of should we actually raise financing, or not," he said. "We have been in business for three years and I think every year we vacillate on the issue. And finally as we got into this year, we looked at how the market was receiving our products, and we said: 'Look, we have to take this thing bigger, faster.' And it is hard to do that out of cash flow."

Shahani

Shahani declined to discuss specifics around profitability or revenues, though he did say the business is growing despite the economic downturn. Large health care and pharmaceutical companies use the Appature software platform to better understand how to allocate marketing dollars within the organization, as well as to track prospective clients and perform targeted marketing surveys. It does that both in the traditional and online arenas.

Shahani said that the company's profitability has been a strategic advantage in the past as it goes into meetings with large customers.

"We've been able to give our customers confidence that we are a profitable business," he said. "We are not relying on debt or a pool of capital that could go away if we burn through it so ... customers feel really comfortable continuing to give us more and more business."

Won't the capital injection change that impression? The 27-year-old entrepreneur doesn't think so, calling the new money simply an "accelerator."

"We want to make sure that we watch margins across different parts of our business, so that we don't invest too much ahead of revenue in engineering for example," he said. "The goal is to stay within the realm where we always have been from a profitability perspective, and not getting too much into just burning through cash."

That's part of the reason why Shahani said they limited the amount of money that they raised.

Appature employs 11 people, with plans to grow to as many as 20 in the next six months. Much of that growth will occur in sales and marketing, an effort that Shahani said has been lacking over the years. Competitors include Siebel and Unica.

Madrona and Ignition have worked together before. Both firms hold equity stakes in Bellevue-based SinglePoint and Seattle-based Skytap. But this appears to be the first time that the two venture firms have co-led an investment in a new deal.

The deal signals a fresh appetite among some venture capital firms for startup companies that have achieved revenues and -- better yet -- profits.

“It’s rare to find a company that has built a profitable enterprise without seed capital, let alone one that has acquired the quality of customers Appature serves,” said Ignition Partners Richard Fade in a statement. “There is a lot of depth to both the technology and philosophy of the company – and the results they achieve for their customers are truly remarkable.”

John Cook is co-founder of TechFlash. Follow on Twitter @johnhcook.