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August 22, 2007
Sweden's EPiServer: A CMS Business Model That The Money Likes
Amadeus Capital Partners and Northzone Ventures, together with Peter Larsson (founder of Protect Data, mobile security tech startup acquired by CheckPoint for $585M last year) have acquired a majority stake in EPiServer, a Stockholm-based web content management platform developer.
They paid $23.5M for the equity and Larsson will join the company as CEO.
A couple of things made us follow up on this announcement. It is a later stage deal for two VCs known for early stage. EPiServer was founded in 1994.
And it's a content management software deal. Yes there's a lot of spending on webdev these days - the last time we looked even Intershop was growing sales again - but there are already about 1300 CMS firms in the market, so why this one?
And the third reason is Peter Larsson who will return to the fray with this one.
More insight into the latter two was given to us by Jeppe Zink, of Amadeus in a phone interview. More on the first observation we will save for another post- fact is, it's a trend among many, but not all, of the tech-oriented European VCs that recently raised new funds.
Zink anticipated the question about why a CMS company (you can imagine him pitching the deal to Amadeus senior partners). He acknowledges that it is a fragmented market where most of the money is made in services.
The industry average ratio he gave us was 1 to 5 (for every one product dollar there's five dollars for services).
This startup sells to developers, over a thousand. It does not do direct sales. It does not get involved in the service side, which is where the majority of rivals generate sales, as mentioned before.
The company's business model enabled it to acquire 1500 customers with a sales and marketing team of less than five people and it has a greater than 20 percent margin on sales, according to Zink.
It grew developer end user numbers during the downturn, according to its website we note.
Nevertheless, its partners page suggests there is plenty of room to grow in countries beyond the home region.
According to its partner FAQ, it provides its platform, guidelines and training (certification) to developers and channel partners for a fee and leaves the rest to them. There is a module trading exchange too.
In summary, for the investors the technical and business model risks are out of the way. Zink said as much in the interview: "The challenge now is to scale the business, while adding more next generation, or Web 2.0, functionality".
This is where Larsson will contribute. He was brought to the syndicate and the startup's helm by Northzone. "EPiServer has the same model [as Larsson's previous company]. It is a different market, but the same business model," said Zink.
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Posted on August 22, 2007 09:39 PM | Posted to News And Updates | Web 2.0 | Permalink
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