These Philly software firms are attracting big investors
Robert Moore's Philly-based Crossbeam bought Paris- and Texas-based rival Reveal. Customers say that's a good thing.
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Bob Moore is the kind of serial startup founder more often found in San Jose than Philadelphia, where big software success stories have been scarce, and opportunity pulls many ambitious tech leaders far away.
Since he earned a bachelor’s degree in engineering from Princeton University in 2006, then served a two-year venture capital apprenticeship at Insight Venture Partners in New York, Moore has gone on to cofound three Philadelphia software companies:
Big-data analytics toolmaker RJMetrics (now part of publishing software giant Adobe Systems)
Data integration service developer Stitch (now part of King of Prussia-based Qlik, owned by Chicago-based software investor Thoma Bravo)
Crossbeam, a secure-data-sharing software maker backed by venture capitalists including Philadelphia-based First Round Capital and Silicon Valley venture pioneer Andreessen Horowitz, an early backer of Twitter and Facebook
In June, Crossbeam announced a deal of its own — not a sale, but a purchase. It agreed to buy a competitor, Reveal, a France-based company backed by Insight, his former employer.
“It’s a huge deal for us,” Moore said at the time, noting the combined companies, with 135 employees and more than 30,000 corporate clients, will be based in Philadelphia, with Moore as chief executive.
Simon Bouchez, founder of Reveal, is now chief operating officer and “cofounder of our combined company,” Moore said in an interview after the sale. “We’re creating a new category of business,” competing with other new artificial-intelligence sales applications, with targeted-advertising giants Google, Amazon and Facebook, and with customer-relationship management software providers such as Oracle and SAP.
Software merger season
Since the Crossbeam-Reveal merger, there’s been a stream of sales and acquisitions among Philadelphia-area software companies. Recent examples include:
On Sept. 5, Bank of New York Mellon (BNY) said it would acquire Archer, a 170-employee, Berwyn-based firm that makes and sells account management software for many of the largest U.S. banks and asset managers. Archer, founded in 2000, was backed in its early years by one of the largest locally based private investors, Radnor-based NewSpring Capital, which recruited Archer’s CEO, Bryan Dori. BNY says Dori will remain in charge, along with his management team.
On Sept. 6, Bentley, the 4,000-employee, publicly traded Exton-based construction-software firm founded by five brothers from Delaware, agreed to purchase Center City-based mapping-software maker Cesium, with a staff of 60, and a million monthly users on handheld devices. The two already share big customers, such as Komatsu, the construction-equipment giant.
On Sept. 9, Cantaloupe, a publicly traded Malvern firm that makes vending-machine software for 30,000 users in North America, Europe and Australia, said it was buying SB Software, which provides vending and coffee management software in the U.K. and Ireland.
On Oct. 1, Sabre Systems, a 35-year-old communications and security software developer, which employs 45 at its Warrington headquarters and 250 around military installations at Lakehurst, N.J., and the Washington, D.C., area, said it has agreed to be purchased by New York-based private-equity investor CM Equity Partners, which focuses on consolidating “fragmented” tech businesses.
Prices for those transactions haven’t been disclosed.
From finance to tech
Why the flurry of deals?
“There is a general trend toward further globalization of software,” said Vincenzo La Ruffa, West Conshohocken-based managing partner at Aquiline Capital Partners, a $10 billion-asset fund manager that invests in software firms.
La Ruffa said the trend is pronounced in Philadelphia because it is a center for financial technology (fintech) and data security tech companies. The city’s historic banks are gone, but the region remains a financial headquarters, home to large investment companies (such as Vanguard Group and SEI Corp.), investment trading companies (including Jeff Yass’ Susquehanna International Group), multibillion-dollar private-equity firms (such as Aquiline, Mike DiPiano’s NewSpring, Ira Lubert’s LLR, and the Susquehanna Growth Equity fund); and big pension funds that invest in private equity, such as the Pennsylvania state retirement systems.
That has helped create both regional demand for innovative financial and data software, and a regional supply of engineers, programmers and founders like Moore, whose startups are now attracting more investors to help the firms grow larger.
Add the recent drop in interest rates, which dealmakers have eagerly anticipated, at a time when many large investors are flush with cash and looking for new deals, and it’s now easier to borrow money for acquisitions, said Michael Mufson, founder of Mufson Hunter and Howe, the Center City-based investment bank focusing on private, middle-market companies.
But are tech company sales that enrich founders like Moore and venture capital firms like Insight useful to tech companies’ customers?
“It makes my job easier,” said Angela Brohman, director of alliances at Atlanta-based sales-software developer Salesloft.
Her clients at Google, 3M, Shopify, Cisco, Square and other big tech companies expect near-constant and steadily improving communications and analyses of Salesloft’s work to help target their sales efforts, she said. “Crossbeam and Reveal help us track the salespeople, not for the sake of [spying], but their interactions with the buyers.”
All that data accumulation and the resulting, constantly evolving sales recommendations “yields information you won’t get taking people to steak dinners and hoping that closes the deal,” Brohman said.
“We can see, before we decide to [try to sell to] a partner, ‘How much opportunity is here? Will this give us new prospects?’ We can measure customer retention and sales rates. We can go in without having to say, ‘Hey, we saw you on our website,’ which can be creepy and strange. This is much more contextual. We meet our customers where they want to be.”
So how is one merged data-sharing provider better than two? “Switching back and forth between them, depending on what the client uses, is distracting,” Brohman said. “Having everything in one spot is going to really help our sellers expand who they are targeting. We’ll have a much more relevant pitch.”
Mashing the data
Crossbeam’s takeover of Reveal “is a big win for us,” enabling his firm to “mash their data sets together,” said A.J. Bruno, chief executive of Philadelphia-based sales tech platform QuotaPath. (Like Reveal, it is also backed by Insight Venture Partners, Moore’s old employer.)
A Chester County native who moved his young family “home” to Philadelphia after stints at tech companies in Texas and California, Bruno met Crossbeam co-founder Moore through Philly Startup Leaders, the local organization for nascent tech founders. He says the merger under Crossbeam’s leadership gives Moore “a really big global opportunity. That’s really exciting for Philadelphia software.”
Bruno figures each sale of a Philadelphia tech company is a win for the region. “It’s worked for cities like Austin,” where Dell founder Michael Dell sold his computer firm — twice — and reinvested in Texas tech start-ups. “Here, people like Bob Moore and I, when we are successful, will keep reinvesting, heavily.”