Masthead Venture Partners, Mobius Venture Capital and Vista Ventures participated in the round of funding. All three companies had previously invested in NewsGator.

NewsGator initially focused on the RSS market and has since broadened its focus to enterprise social networking with its Social Sites product.

Social Sites, now in version 2.5, is designed to provide a Facebook-like experience in the workplace to improve communication and collaboration among employees. It is specifically designed as a complement to Microsoft's SharePoint Server.

The Edelman public relations firm was among the large companies that became NewsGator customers in late 2008, along with banks, pharmaceuticals and manufacturers.

The fourth quarter of 2008 was the best in terms of revenue in NewsGator's five-year history, the company said. NewsGator's competitors include SocialText, Jive Software, Central Desktop, Telligent and Atlassian, as well as bigger players such as IBM and Google.

These companies are all trying to capitalize on the rising interest among IT managers and CIOs in implementing social computing capabilities in their workplaces, having seen how these systems can help employees communicate, collaborate and do their jobs more efficiently.

The interest in enterprise social networks, workplace RSS, corporate blogging and workplace wikis follows their booming popularity among consumers in recent years.

Specifically, enterprise social networks typically mimic the core functionality of consumer sites such as Facebook and MySpace, including the creation of lists of "friends" and the easy sharing of messages and content. However, enterprise social networks, like other workplace social computing technologies, have special security and IT control features, as well as workplace-specific capabilities.