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March 21, 2018

Mo’ Betta, with Avetta!

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Over the years, our growth equity team has had the opportunity to work with numerous companies in “tipping-point” sectors to help them grow and build significant value for all shareholders. Some of our most successful exits to date include 1010data, Clarus Commerce, Kendra Scott, PCA Skin and The Rainmaker Group.

Today, we’re proud to add Avetta to that list of innovative companies. This morning, the company announced that Welsh, Carson, Anderson & Stowe (WCAS), a leading private equity firm, will acquire a majority equity interest in the company, with TCV participating as a minority investor. Before we talk about what this means for Avetta, its future and how Norwest will continue to be involved, we’d like to take a look back on how we got here.

Avetta (formerly known as PICS Auditing) is the leader in cloud-based supply chain risk management and helps connect the world’s most recognizable enterprises to qualified suppliers on a global basis, which in turn, helps drive their safe and sustainable growth.  Avetta primarily does this across “dirty and dangerous” industries like oil and gas, construction, mining, telecom and many others.

When we first came across Avetta, it was founder-owned, profitable and growing nicely; straight out of central casting for our typical growth equity investment.  However, before we could invest, we had to establish trust with the founders John Moreland and Jared Smith and persuade them that in addition to capital and our deep industry expertise, we could bring real value to their company by assisting with business development, M&A, strategy, hiring and a multitude of other business-building initiatives. As management did not need any capital, we were competing with not only other investment firms, but management’s interest in doing nothing at all.

During our first call with Jared, we shared our thesis around compliance-driven technology  and our philosophy of acting as “invited guests” in Avetta’s business, with the goal of adjusting our approach to their style of management. We discussed how a partnership with Norwest would provide the company with access to a unique set of resources and proprietary business building programs that could not be found elsewhere. We courted John and Jared for nearly two years until they decided to bring Norwest on as a minority shareholder in 2012 where we closed our transaction on December 28, in a 35-day sprint to ensure favorable capital gains treatment.  In the end, Jared Smith said, “One of the reasons we chose NVP was because they understood our vision and believed in us.” John Moreland added, “NVP wanted us to keep doing what made the company great.”

During our first two years as investors, we assisted management with building the company infrastructure that would allow it to scale for the future.  We helped hire key executives, develop KPIs to assess the health of the company, improve the GTM strategy, create a sound product roadmap, reduce extraneous costs and build a benchmark framework for management to achieve best-in-class performance.  We earned so much trust from J&J in that first two years that they thanked us for being such good stewards of their business and offered up the opportunity for us to take a larger stake in the company, as they desired to step back from day-to-day operations.  

We then worked with J&J on finding a new CEO who would continue to drive the company forward with their shared strategic vision. Today, led by CEO John Herr and his world-class management team, Avetta’s software is used by over 50,000 customers in over 100 countries and we’ve only begun to scratch the surface of this $10 billion global opportunity with logos such as Amazon, GE, Exxon, John Deere, Johnson & Johnson, Shell, Sprint and Verizon as current customers.  Our work with John and team has revolved around driving proven SaaS best practices, introducing numerous data, reseller and product partnerships and identifying and recruiting industry luminaries to our advisory board and board of directors.

While we’ve shared in the success of Avetta to date, we at Norwest are such believers in the company’s future, that we’ve decided to roll a very meaningful part of our equity into the deal moving forward with WCAS and TCV. We look forward to working with them on providing continued business-building support for years to come.  We’d like to congratulate and thank John Herr, John Moreland, Jared Smith, and the entire Avetta team on this great outcome and we look forward to our journey ahead. Stealing John Herr’s favorite corporate battle cry, things truly are Mo’ Betta with Avetta!