Two years ago, when Insight Venture Partners approached Aelita Software with a deal, the company backed away. Insight owned a piece of Quest Software – an Aelita competitor. Besides, Aelita didn’t need the cash. It had bootstrapped its way for two years, secured a handful of customers and was on track to turn a profit.
Insight Venture Partners did not back off. When the firm liquidated its interest in Quest, it called Aelita again. It made another pitch earlier this summer, and this time, the Columbus, Ohio-based Aelita was ready to bite.
The deal finally closed earlier this month, and the enterprise software company walked away with a $10 million Series A round, financed entirely by Insight Venture Partners of New York. Insight now owns approximately 35% of the company, putting its pre-money valuation at $28.6 million.
Aelita makes usability management software. When a company migrates its users from one version of a program to another, Aelita’s software will handle the operation. It will also do an audit of a company’s IT systems, and perform backup and recovery for an entire enterprise network.
Scott Maxwell, managing director at Insight, says his firm had been skeptical about investing, but couldn’t resist Aelita. “We have been very selective in pursuing opportunities this year because of uncertainties in the market. But, Aelita has a very mature organization for a company receiving its first round of funding,” he says.
Last year, the company reported revenue of $12.8 million and says it is on track this year to reach revenue of $22 million.
“We’ve always focused on profitability and not on things like market share,” says Ratmir Timashev, Aelita’s chief executive and president. “We can run this business conservatively from a fiscal standpoint and continue to grow. We won’t need money in the future.”
Although the company will spend $3.5 million this year to fund research and development, it will also use this round of financing to drive product development. Aelita will add functionality to its software suite and also develop cross-platform software so that it can be used with Windows, UNIX and linux systems.
Already, the company has more than a dozen customers in the education, financial services, health care and telecommunications industries – from Corning Cable Systems and Mellon Financial to Paine Webber, the Pentagon and Pfizer Inc. It will continue to target these sectors, and, with Insight’s capital infusion, expand its reach into Europe and the U.K. It plans to double the size of its staff – from 270 to 550 – by the end of next year.
Email Carolina Braunschweig