Published by The Gazette | November 27 2012 | Written by Wayne Heilman
A Colorado Springs-based software company has become the first local firm to receive venture capital in more than four years and plans to use the $25 million it landed last month to add 100 employees during the next year to expand its sales operation and product line.
Cherwell Software, which develops and sells software that keeps computers, network and other information technology equipment running properly, received the funding from New York-based Insight Venture Partners in exchange for a minority interest in the company. The funding is the first outside investment in Cherwell and the first venture capital secured by any Colorado Springs-area company since Accellos landed $28.5 million in September 2008 from Monitor Clipper Partners LLC and three other funds.
“This funding is less about needing the money and is more about managing our growth. We have grown rapidly and are profitable. Since we didn’t have to sell a majority interest, we can get the benefit of how to manage growth without giving up the company’s culture,” saidCherwell CEO and co-founder Vance Brown. “We are excited to welcome Insight Venture Partners to our team. With Insight’s capital and its expertise in working with fast-growth software companies, we will be able to achieve our customer and product goals even more quickly.”
Mayor Steve Bach called the investment great news and said he hoped that the investment “will encourage other venture capital sources to take a close look at our city — this is a great place to invest for the future.”
Cherwell has benefited from a Top 3 ranking among more 200 vendors in the information technology support management software industry, including industry giants like CA Technologies, Hewlett-Packard and IBM, published in August by information technology research giant Gartner. The industry gained financial clout with the June public offering of competitor ServiceNow — its stock more than doubled to $40 a share after the offering before declining along with the rest of the stock market in the past month.
“Cherwell Software represents a winning value proposition that Insight has seen succeed time and again: a world-class product that is cost-effective and easy to use,” said Richard Wells, an Insight managing director, who will join Cherwell’s board as a result of the investment. “Insight was attracted to the management team’s vision and the company’s strong momentum, particularly as awareness of Cherwell spreads across the information technology service management market. Insight invested to provide growth capital for Cherwell to win in the market.”
Brown declined to disclose Cherwell’s revenue or earnings, but said the company has more than doubled its staff in the past year, from 47 to 100. Cherwell, formed by Brown, Arlend Feldman and Tim Pfeifer in 2005, targets midsize organizations with 1,000 to 10,000 employees and offers its software to purchase and install or to lease and use online.
Cherwell’s more than 400 customers include BE Aerospace, CFA Institute, the Weather Channel, Wake Forest University, the University of New Mexico, the Munich Airport and the Dartmouth-Hitchcock health care system.
Brown, Feldman and Pfeifer all were former executives of software developer FrontRange Solutions before it was sold and moved its headquarters from Colorado Springs.
Insight Venture Capital has raised more than $5 billion since it was started in 1995 and made more than 150 investments in software, electronic commerce, Internet and data-service companies worldwide, including online coupon startup LivingSocial and social media giants Tumblr and Twitter.
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