Jama Software, which helps companies manage complex projects, is raising $13 million from Trinity Ventures and Madrona Venture Group in the latest sign that the Portland, OR technology industry is hitting its stride.
Oregon startups—most of which are concentrated in the Rose City—are having one of their best years in terms of fundraising since before the recession, with $86.1 million invested through the second quarter. And software-industry employment is growing faster than the Oregon economy as a whole.
Jama Software, founded in July 2007, previously raised a small amount of seed capital from individual Northwest angel investors, including members of the Oregon Angel Fund, Bellingham Angel Group, and through winning the 2007 Bend Venture Conference investment prize. Since then, the company has been “customer funded,” says Eric Winquist, co-founder and CEO.
In the last four years, revenue has grown about 900 percent, he says, and the company is cash flow positive. Earlier this year, the company was listed 84th on the Forbes America’s Most Promising Companies List, with 2012 revenue of $9 million, a figure Jama confirmed.
The Series B funding round the company is announcing today grew from about $8 million to $13 million thanks to a “tremendous amount of interest,” Winquist says.
“One of the benefits of waiting [to raise venture capital] and really building out the business first is it gave us a number of options to go out and select the funding partner,” he says.
Trinity, the Menlo Park, CA-based early stage VC leading the round, and Seattle-based Madrona were willing to fund Jama’s plan, as opposed to dictating to the company on the right level of funding, and were the best fit with Jama’s culture, Winquist says. Trinity’s Karan Mehandru is joining the Jama board. Tim Porter of Madrona will be a board observer.
Winquist displays his sense of humor when asked what the company will do with $13 million in fresh capital. “Big parties,” he quips.
In reality, Jama’s plans sound pretty typical for a growth-stage enterprise software company with its eyes on a big potential market: Hiring in internal research and development to add features and make its software work with other tools and applications, and in sales and marketing to drive sales and international expansion. The company has about 80 employees.
Winquist says his company has been able to find good engineering and sales talent locally, and that the growing profile of Portland technology startups—highlighted in a slick Tech Town promotional video that featured Jama, Elemental Technologies, Act-On, Urban Airship and others earlier this year—has helped attract people from elsewhere.
Oregon has upwards of 12,700 software jobs, and the sector is growing significantly faster than the rest of the state’s economy, according to a state analysis detailed by The Oregonian earlier this year.
Oregon has also seen an uptick in venture capital investment. Portland-based technology companies have landed more than $175 million of venture investment in the last four quarters, according to the PwC/NVCA MoneyTree Report based on data from Thomson Reuters, and the total for the first half of the year was the best since the comparable period in 2007.
Mark McCaffrey, the software leader in PwC’s Technology practice, says Portland companies, in part, are riding the same trend of healthy VC investment in software and IT services across the country. But he says he hears about Portland more frequently in VC circles than he used to.
“I do hear Portland being mentioned a lot more because it is an economical place to do business, and there’s a good talent pool there,” he says. “Portland is still growing, but it’s definitely come on a lot.”
Recent deals for Portland-area tech companies include $2.2 million for Lytics, $6 million for Chirpify, $7 million for Treehouse, and the major investments that went down in the winter of 2012-13: $25 million for Urban Airship; $30 million for Puppet Labs; and $33 million for Janrain. McCaffrey cautions that Portland is still a relatively small market, and so a single large deal can skew results for a quarter.
Entrepreneurs in Portland have definitely noted a change.
“The last year or so clearly demonstrated that venture firms are willing to fund Portland- and Oregon-based companies to a significant degree,” says Winquist, a native of Eugene, OR.
Erik Benson, managing director of Seattle-based Voyager Capital, has been making venture capital investments in Oregon startups for the last decade. The inflection point, he says, was 2007, the year Jama was founded. Also that year, Jive Software relocated from New York City; Elemental Technologies landed seed funding; and Act-On Software was founded. (The latter two are Voyager portfolio companies.)
“These four companies and their founders were in the best generation of Oregon startups in many years,” Benson says via email. “They were all going after large market opportunities with disruptive technologies. They’re all now either publicly traded or on high-growth paths towards IPOs.”
Winquist says he is trying to run Jama transparently, with financial diligence, high-quality customer service, and other practices expected of publicly-traded companies. He says Jama could be an IPO candidate in a couple of years. But in the meantime, he says, customers such as SpaceX, Deloitte and 20 others in the Fortune 100 demand those practices.
Jama’s software is aimed at companies with large teams spending lots of time and money to develop complex products such as software and medical devices.
“The legacy ways of building products”—known as application, product or portfolio lifecycle management—“haven’t kept up with how product development is being done these days,” Winquist says. “It’s the most social, collaborative, and far-reaching activity within the enterprise.”
And while it is crucial to any business, research and development is also one of the most costly and inefficient business activities, he adds.
Jama tries to solve this with a tool that tracks development from concept to product introduction, providing a “structured collaboration environment” for discussing, deciding on, reviewing, and approving requirements and features; testing and quality assurance; regulatory compliance; and more.
Jama delivers its software as a service—though it can be deployed on site if necessary—and charges $1,000 per user, per year, with additional pricing tiers and scale discounts. http://www.jamasoftware.com/how-to-buy/
Jama competitors include some very big names: IBM’s Jazz and Doors products; Quality Center from HP; and several Microsoft offerings. There are also smaller competitors that overlap some of what Jama does, including Rally Software and Serena Software.
Winquist says most companies don’t yet have a specialized tool for managing product development, making for a large untapped market. “The majority of companies, 80 percent, still use spreadsheets and documents to manage these multi-billion dollar projects,” he says.
Photo of Portland by A. Davey via Flickr.
