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August 3, 2015

Investing in Big Data – the 1010data Journey

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When we started the Norwest Venture Partners growth equity practice back in 2009, our mission was to find private, rapidly growing, profitable, founder-owned companies in which to invest across multiple industry sectors. Through deep thematic research, in highly strategic industries, we would proactively create investment opportunities, leverage Norwest’s long track record of success, and add significant value to our portfolio companies. Our goal was to invest “where the puck was going,” not where it had been. Today we acknowledge our team’s skating ability with the announcement of the sale of our first investment from 2010, portfolio company 1010data, to Advance for $500MM.

We first cold-called the founders of 1010data, Joel Kaplan and Sandy Steier, in the summer of 2009. Based on the simple premise that people always want more information to make better decisions, we made data analytics and information management one of the core focus areas for our team. If you googled “big data” during this timeframe, it was a much less common term, and we believed we were ahead of the curve. We had come across 1010data through such research, as the company is a partner with one of my former portfolio companies, CoreLogic. I met Joel and one of his board members, Judah Frankel, for dinner one evening in NYC shortly thereafter. Joel shared his impressive technology background and described how 1010data had grown to dominate Wall Street as the preferred analytics platform for anyone trading mortgage-backed securities. 1010’s technology platform was lightning fast, highly scalable and had a total cost of ownership far below competing solutions. Joel and Judah shared the vision to take 1010 beyond Wall Street into other verticals and asked how we could help.

1010data’s Only Outside Capital

I came back to Palo Alto and worked with our partnership on ideas for customer introductions. We made several and quickly, one of these prospects in the telecom sector turned into a paying customer. Joel and Sandy had been considering a transaction to obtain some partial liquidity and raise growth capital to accelerate the company’s move into new verticals. They appreciated Norwest’s quick and successful actions in their support. They agreed to explore a transaction and we ultimately consummated a deal in the spring of 2010 with a $35MM minority equity investment, the first and only outside capital investment in the company.

The last five years with the team have been a whirlwind of activity across many areas as 1010 has grown from a financial services-focused company with 25 employees, to a true enterprise-scale SaaS business with over 150 employees. 1010 is fielding customers in not only financial services but now retail, insurance, consumer packaged goods, restaurants, telecom and government. Norwest has worked closely with management to help find and recruit key members of senior management and the board, while sharing and encouraging best practices in scaling sales and marketing organizations in the enterprise software world. The company has participated in countless Norwest “Partner Days” and benefited from our firm’s deep knowledge of the data informatics landscape with key partner introductions and data monetization opportunities. Our full suite of portfolio services in marketing, recruiting, HR and finance have been called upon during our hold period at various times – this was a full team effort.

Adding Value

When investing in founder-owned and led companies, it’s important to remember we are an invited guest at the table. We may not always see eye to eye with management on all topics and the skating is certainly not always smooth. However, our purpose is to add value on the periphery and let management team members continue to operate a business as best as they see fit, while maintaining the corporate culture they’ve created and the empowerment to do it “their way.”

I’d like to congratulate and thank Joel, Sandy, and the entire 1010data team on this great outcome and we wish Advance best wishes moving forward on the next leg of this exciting journey!