Toronto-based social enterprise software maker Rypple will announce on Wednesday that it’s picked up $7 million in financing led by Silicon Valley venture capital firm Bridgescale Partners.

The new funds will help the company continue investing in its flagship talent management tool and will also provide a boost to its marketing and sales team. Rypple’s co-CEO Daniel Debow said that his company has relied solely on word of mouth and product quality.

“Up until now, we have not done any marketing,” he said. Rypple’s customers already include Rackspace Inc., Vivaki Inc., and the Mozilla Foundation.

Debow added that the money will not be spent on building out a traditional enterprise sales team, because Rypple has found “if you’re just helpful to the people who find you on the Web, they tend to want to buy from you.”

This philosophy has carried over to Rypple’s business-focused social networking product, which Debow said cannot simply be classified as a “Facebook for the enterprise.” Instead, he said, Rypple has looked at what made Facebook successful with consumers and tried to take those ideas to the business.

“Many businesses don’t like Facebook because people don’t behave like they’re sending photos to friends at work,” Debow said. The product is built with feedback and collaboration in mind.

Rypple’s target has been business, IT and HR managers, who use the product to coach, gain feedback, and share ideas with their staff. For example, a manager can set a project goal for a particular employee, offer and accept feedback from the employee on the goal, and publically acknowledge the employee if things are going well.

In addition to the extra cash, the company made two appointments to its board, adding Howard Gwin, a former PeopleSoft executive vice-president, and Roger Martin, the Dean at the University of Toronto’s Rotman School of Management.

“This should be another Taleo,” said Gwin, who also serves as a partner for Bridgescale. Taleo Corp., a NASDAQ-traded staffing management firm in San Francisco, has Canadian roots that dates back to two Quebec City entrepreneurs.

Gwin said his confidence in Rypple stems from his observations of the enterprise software space in general, particularly HR software products.

“Software for yearly performance management reviews basically suck,” he said. “No one likes getting them. No one likes giving them out.”

With Rypple, Gwin said, HR management can become an ongoing process because all of the manager-employee feedback is contained in one place and tracked throughout the year.

Gwin said Bridgescale decided to invest in the product after it saw this in action. He said Rypple has been especially successful among early adopters because end users are seeing the value and find it easy to use.

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