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Evolve: Fundraising Case Study

Bridge financing and a venture investment

Evolve Software, then a private company, had devoted three years and several million dollars to develop solutions to automate professional service organizations, much in the way that SAP automates manufacturing-intensive industries.

Shortly before we became involved with the company, Evolve had just completed development of its solution and won its first pilot customers. The company appeared to be well positioned with a huge market opportunity in front of it. Initial feedback from the company’s prestigious pilot customers and industry analysts was quite favorable.

Unfortunately, unexpected difficulties caused a critical round of funding to be scuttled at the 11th hour. Cash reserves were exhausted and the company faced the prospect of laying off the majority of its employees within weeks or even declaring bankruptcy.

We were brought in to try to quickly save the company. With the immediacy demanded by the situation, we helped the company explore its financing options, including bridge loans, venture capital, and strategic financing. Through our contacts and by keeping an active pulse of the market, we were able to quickly introduce the company to willing sources of bridge financing and bring several top venture capital firms to the table. Obviously we had to get up to speed immediately so as to sell the company’s opportunity and cultivate interest without the luxury of the typical fundraising cycle.

One of the VCs we brought to the table was Sierra Ventures, one of the leading Sand Hill Road venture capital funds with over $1.1 billion in invested capital over 8 funds. Sierra has a keen focus on enterprise software and has made investments in several notable companies, such as Intuit (INTU), Healtheon (acquired by WebMD), Motiva and OnLink Technologies (both acquired by Siebel Systems), CrossLogix (acquired by BEA), FairMarket (acquired by eBay), and many others.

Sierra’s aggressive interest allowed them to win the investment opportunity, in the process interrupting and replacing our willing source of bridge financing. With its near term financial issues solved, we were able to help Evolve close a $10 million venture investment with Sierra. Time to final closure was less than three months from our first involvement.

As a result of our all-out fundraising efforts, Evolve was able to continue executing on the opportunity facing it. Business blossomed and in roughly 18 months, the company completed a highly successful IPO on the NASDAQ, raising nearly $50 million. Annual revenues hit $35 million in only 2.5 years. Since then, Primavera Systems, a leading provider of project portfolio management solutions, acquired the company.

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