Fortiva said on Monday it had completed its first round of funding, raising $8 million to allow it to expand its email-archiving systems for financial compliance, legal discovery, and email storage management.

Fortiva raised the equity financing from Cargill Ventures, Ventures West, and McLean Watson Capital.

“Fortiva addresses all aspects of effective email communication management—storage, security, regulatory compliance, and legal discovery,” said Paul Bieganski, managing director of Cargill Ventures.

Increased compliance demands from the U.S. Securities & Exchange Commission, New York Stock Exchange, and National Association of Securities Dealers have placed greater emphasis on financial firms retaining all their email messages and rapidly providing messages whenever regulatory authorities request them.

The Radicati Group predicts that email archiving will grow significantly over the next three years and forecasts total vendor revenue to reach $4.4 billion by the end of 2009.

Email archiving also fits in with increased demands for more responsible corporate governance policies, and for the need to provide email during legal discovery proceedings.

Cargill spent about three months on the due diligence process while evaluating the Fortiva investment and decided to take a minority stake, as it typically does with ventures.

This is the first investment for Cargill in the email field, but the firm has previously invested in other storage management companies.

“They generally hit the things you would look for in any good deal,” said Mr. Bieganski. “They’re going after an interested market, and they had a great technology and a great team. The market for email archiving and compliance security is still growing and still underserviced, especially in small and medium-size enterprises.”Building the Customer Base

Fortiva currently has about 26 customers, mostly in the financial services industry, according to Fortiva CEO Paul Chen. The Toronto-based company plans to use the funding for sales and marketing activities to attract more customers.

Mr. Chen compares his company to Salesforce.com, with its on-demand software model that relies on web-based applications. “We allow people to implement a solution quickly without headaches,” he said.

Salesforce.com

The software, which Fortiva has been developing for the past two years, includes search capabilities that enable firms to retrieve emails quickly using the kinds of searches they might do with Google.

Google

Fortiva encrypts email messages to protect the privacy of its customers and provides the encryption key only to the customer.

“We guarantee to each customer that we can never see the data,” said Mr. Chen. “We have technology that provides double-blind encryption.”

Fortiva does face competition in the on-demand email-archiving field from a number of larger providers, however, including IronMountain and Zantaz. The Fortiva service also works only with Microsoft Exchange currently.