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Last year, veteran LLR Partners enterprise software dealmakers Greg Case and Paul Winn left the Philadelphia-based PE shop to set up business under their own shingle, with the name Peak Equity Partners, based in Radnor.
In December, Peak made its first buyout: Bedford, Massaachusetts-based EnterpriseDB, a well known player in the open source database market. Peak sourced and co-led the deal, along with participation from Milestone Partners and NewSpring Capital, also of Radnor. Terms were not disclosed, but Case confirmed to Philly Tech News in an interview that it was a complete buyout of the company, not just an equity stake.
Although Peak contributed to the investment, Case could not comment on his firm's own fundraising efforts at this point.
EnterpriseDB, founded in 2004, had a total of $60 million of venture capital investment prior to the buyout, according to Case. Investors included IBM, Fidelity Ventures, Valhalla Partners, CRV, and Translink Capital, according to CrunchBase. It's not clear to me that the valuation at which EnterpriseDB was acquired by Peak exceeded whatever its highest VC valuation was, but that certainly doesn't mean EnterpriseDB isn't a promising company at this point.
EnterpriseDB specializes in PostgreSQL (or Postgres), the open source version of Ingres, one of the earliest entrants in the RDBMS (Relational Database Management System) market that grew up mostly around Berkeley in the 1970s and 80s. Commercially, Oracle crushed most of the others, but PostgreSQL became a popular open source alternative, and may have gained momentum when Oracle picked up MySQL as part of its Sun Microsystems acquisition of 2009, since many open source users are distrustful of Oracle and its commitment to open source.
EnterpriseDB has a Red Hat-like model; in fact, that's where it's CEO came from. It sells apps and services as well as its own commercial release of PostgreSQL. EDB was named a leader in the Gartner Magic Quadrant for operational database management systems in 2014. PostgreSQL (including non-EDB versions) currently sits in fourth place in the DB-Engines rankings, which measures trending activity, behind Oracle, MySQL and Microsoft SQL Server.
My sense is that EnterpriseDB's initial focus on convincing Oracle RDBMS customers or prospects in large enterprises to switch over completely to its Oracle-compatible Postgres RDBMS fell short. Its recent product introductions suggest a more segmented approach. One area its been emphasizing is Foreign Data Wrappers, which enables DBAs to pull data from a variety of sources into a PostgresSQL environment, creating a central data store. Postgres has foreign data wrappers for Oracle, MySQL, and Informix, and has recently created bridges to the rapidly growing NoSQL world with foreign data wrappers for Hadoop and MongoDB. EnterpriseDB is also looking to the private and public cloud markets for growth.
Case says that EnterpriseDB is growing and is cash flow positive. The company has reported a subscription revenue CAGR of over 50% since 2011, according to Peak.
"We believe Postgres' superior technology and open source value will be a huge disruptor of the database market," said Case. Although Oracle is still the dominant force in the $30 billion database business, the market is beginning to fragment in several ways.
"Postgres is the hottest database. The buy out gives them much needed funding to scale out," commented R “Ray” Wang, Founder and Chairman of Constellation Research, in an email to Philly Tech News.
A couple of years ago, Salesforce flirted with Postgres as an alternative to Oracle, on whose database its platform is built. But in mid-2013 Salesforce & Oracle announced a new nine-year partnership. Whether Postgres was only used as a bargaining chip is unknown.
"Based on public engineering presentations, Salesforce will continue to run their core platform on the world's largest Oracle instance. Meanwhile, new products and features like Heroku Connect for Salesforce will leverage Postgres and other emerging technologies," said Matthew Botos, Managing Director of Alvorden.com, a Philadelphia-area consulting firm specializing in Salesforce.com, in an email to Philly Tech News.
In November, Salesforce announced a new feature for its Heroku platform, Heroku External Objects, which makes data from any Heroku Postgres database seamlessly available within a given Salesforce deployment.
Prior to nearly five years with LLR, Case, a Wharton MBA, spent 16 years at PE firm Apax Partners, reaching the level of Shareholder Partner. There he lead investments in Mt Laurel-based Bluestone Software, later acquired by HP for about $750 million, and Princeton Softech, acquired by IBM. Case met Winn through Princeton Softech, where Winn was CEO, and recruited him to LLR. While with LLR, Winn served as CEO of LLR portfolio company Revitas in Center City.
Peak says it "invests in businesses that have large addressable markets, proven technology and demonstrated traction with a meaningful base of customers. We leverage and provide access to extensive operating resources to give our companies an edge in capturing market leadership and achieving goals."
Peak makes majority or minority investments in buyouts and recapitalizations of enterprise software and solutions companies, with an initial equity investment size of $10 million - $50 million, with additional co-investment options. It targets companies with revenue of $10 million to $50 million.
It will be interesting to see what they do next.