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B2B firm closes after funding collapse

SpaceWorks, a business-to-business software maker, shuts its doors after two investment firms pull out of the company's fifth round of funding.

Business-to-business software maker SpaceWorks shut its doors earlier this week after funding that the company was anticipating fell through.

The Rockville, Md.-based company abruptly shut its doors Tuesday after two investment firms pulled out of the company's fifth round of funding, said David MacSwain, the company's chief executive. SpaceWorks was expecting an additional $10 million through the funding round, he said.

"We simply ran out of cash and couldn't make the next round of funding," MacSwain said. "This is a tough place to be in right now."

The company received $56 million in funding since it opened its doors in 1993, spending most of that developing its software. The company went from 40 employees in 1998 to more than 150 employees.

SpaceWorks makes so-called sell-side transactional software--applications that automate activities over the Web such as personalized marketing, bill presentment and payment, and online customer support. MacSwain said the company was just beginning to develop e-procurement software and services.

MacSwain said investors became leery of investing in the company during the economic slowdown and technology sector downturn.

But he's not giving up hope.

"We believe we can roll out with a bigger software company...We're trying to find a buyer, or strategic partner, to take us forward," he said. "We have a lot of value here and many huge customers that use our product."

Last year, SpaceWorks signed numerous deals during the heyday of business-to-business, including a multimillion-dollar private exchange network for General Electric's aircraft unit.