It isn’t often that you see a Series A company with a proven product and more than 200 customers already on board. Rarer still is a first round company that’s boot-strapped itself to the point of being profitable, cash flow positive and debt-free.
It’s no wonder then that Boston-based Summit Partners recently cold-called its latest portfolio acquisition, Golden Gate Software Inc., and offered to pump $23 million into the company. Golden Gate is expected to announce the transaction’s close today.
“Golden Gate was relatively unique in its combination of both a very sound technical foundation and very impressive customer list,” says Peter Chung, a general partner with Summit. “We tracked their development for over two years before ultimately closing the investment.”
Since the company has been steadily growing its profits for the past six years, this is likely to be its first and last venture financing. While Golden Gate wasn’t actively seeking new capital, the unexpected Summit infusion was a welcome way to bolster its coffers as it expands its sales and marketing efforts to reach a broader audience, says Eric Fish, the company’s chief executive.
Currently, Golden Gate provides a software suite to Global 2000 enterprises in the banking, financial services, telecommunications, retail and health- care verticals, enabling them to back up mission-critical data and integrate data between enterprise applications in real-time. To date, Golden Gate has signed on such big-name players as Bank of America, US Bank, Kohl’s Department Stores and Travelers Express.
“One very typical use of this [software] is you can take information out of a bank’s billing database, for example, and send it to a customer service application,” Fish says. “It’s critical to large businesses. They move lots of data around very quickly. That’s where we really excel – processing millions of transactions a day.”
Additionally, large corporations can use Golden Gate’s software to back up data offsite within seconds to protect the integrity of a business transaction, as well as improve service continuity in the event that a system becomes unavailable due to a planned, or worse, unplanned outage.
“It gives companies a new level of protection they didn’t have before on business-critical transactions,” Fish says.
In these times of uncertainty, when there is unprecedented emphasis on disaster recovery and securing mission-critical data, Golden Gate is catering to a huge market, adds C.J. Fitzgerald, an associate with Summit.
Moreover, although its chosen space is crowded with competitors that offer bits and pieces of similar solutions, Golden Gate claims it is the only company out there that focuses completely on serving high-end customers that process millions of database transactions per day.
“Most of the [big enterprise] players have invested significant dollars over a long period of time building up various databases on multiple platforms,” Fitzgerald says. “Golden Gate is the only company from a technical standpoint that can replicate data in real-time and do it in a bi-directional way, meaning it can change data in one database and replicate it to another.”
Neither the company nor its sole institutional investor has given much thought up until now about whether Golden Gate could be an IPO or an acquisition play. “We have no preconceived notions about how we’ll exit this investment,” Chung says. “Our going-in plan is to help Eric build a world-class company. Whether that leads to an IPO or a strategic sale, we’ll consider that as the opportunities present themselves.”
Golden Gate was founded in 1995.
Contact Robyn Kurdek at: Robyn.Kurdek@tfn.com
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