“Go big or go home” is a refrain often heard in Silicon Valley. And it shouldn’t come as any surprise in a region where anything less than a billion dollar exit is considered paltry. Silicon Valley has if not always, at least in more recent times, been predicated on big bets placed with the expectation (or hope) of big rewards.

All too often, however, the big bets don’t pay off and the players leave this metaphorical casino empty handed, having bet everything and come up short. This situation is, at least in part, caused by the venture capital model which is based on one out of ten investments (or fewer) giving the fund the returns it needs and covering the poorer results from the other investments. While Ma and Pa investors are generally happy with a modest return, professional funds have no choice but to go for the big ones.

What this means is that when a company goes down the venture capital route, it is locked into a path which required it to increase spending, to grow and to continue fundraising in order to get to the size for a meaningful outcome (generally a trade sale or a public listing).

Over the last few years, it’s been fascinating watching this play out in the quote-to-cash space. For the uninitiated, this space is full of vendors that take different (or, sometimes, similar) slants on the processes around creating quotes, processing transactions and tracking cash receipts. In other words, all of the stuff pre-sale through to payment. Two of the players in this space, SteelBrick and Apttus, both tied their boats to Salesforce – they were both deeply embedded in the Salesforce ecosystem, leveraged the Salesforce platform and even had funding from Salesforce’s venture arm.

So when Salesforce made the decision to acquire SteelBrick for $360 million in 2015, in marked a painful time for Apttus.

What’s the jilted lover to do?

Despite putting on a brave face and articulating that it was business as usual for the company, Apttus’ CEO Kirk Krappe was clearly unsettled by the move. Indeed he was still (naively, it would seem) suggesting that an acquisition by Salesforce was one potential exit opportunity for the company:

We will be IPOing this year. That may be a function to figure what Salesforce wants to do and they may think about that [after purchasing SteelBrick at the end of last year]. There’s no reason they can’t buy us too. For me, I have to run the business, and we’re growing 100 percent year on year. If Salesforce came to the table, that would be great if the numbers work. If not, we have an amazingly strong business

Well, that never came to pass and Apttus did what is commonly called a pivot and got intimate with Microsoft, releasing a product tied to Microsoft’s Dynamic platform. It was an attempt by the company to show that it wasn’t a one-trick pony and had some options beyond Salesforce.

Funding, and valuations impact upon optionality

Here’s the thing, though. When you’ve been well-funded by venture capital (Apttus has taken nearly half a billion dollars in funding) your options are few and far between. Either a monster trade sale or a successful IPO. Both of which are predicated on commercial metrics – applicability to an acquirer’s existing business for the first, and good revenue and growth prospects for the second. Apttus, sadly, didn’t really tick any of those boxes.

The only way is up, except when it isn’t

Which takes us to this week’s news that Apttus has been acquired by private equity firm Thoma Bravo. The purchase price hasn’t been revealed at this stage, but it’s a fair bet that it is significantly less than the valuation Apttus enjoyed at its most recent funding rounds. Private equity firms are all about buying cheap, sweating assets and selling high – they don’t exactly pay top dollar for the companies they scoop up.

Thoma Bravo has a history of acquiring enterprise technology companies – in the past, they’ve bought Qlik, Sailpoint, Dynatrace, Solar Winds and others.


While this isn’t the end for Apttus the business, it’s the end of the road for the investors and the promise of future returns they were banking on. It’s not an indication that venture capital is always the wrong way to go for companies, but it’s a cautionary tale about the “all or nothing” mentality and the total focus on the ultimate prize.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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