It’s a familiar storyline: Boston-area startup develops promising technology, starts to build a real business, and then gets snapped up by a West Coast giant.
The startup in this case is Cambridge, MA-based Hadapt, which has been acquired by Teradata, the Ohio-based data warehousing company with big operations in San Diego. Terms of the deal weren’t disclosed, but I’ve confirmed the price was $50 million in cash and stock. (BetaBoston’s Dennis Keohane broke the news last week.)
It’s not a home run for investors—including Atlas Venture, Bessemer Venture Partners, and Norwest Venture Partners—who put in just under $17 million total. But it’s a good outcome, according to the sources I’ve talked to.
“The reason to sell is that the Hadoop space is moving very quickly,” says Hadapt’s former chairman Chris Lynch, a partner with Atlas Venture. “There’s been tremendous consolidation since [Hadapt] started.” (See recent deals from Cloudera, Hortonworks, MapR Technologies, and others.)
The 35-person company has been trying to merge advanced databases with the Hadoop open-source analytics platform—all with the goal of helping businesses in finance, retail, and other industries handle “big data” and huge numbers of user queries in an efficient way.
“Normally you have three to five years to develop a distribution channel,” Lynch says. “In this case, from point of product development they had less than 12 months.” He adds that it “would have been highly risky” to continue as an independent startup. Instead, Hadapt’s technology can now benefit from Teradata’s help on the product and distribution front.
Hadapt went through layoffs and had some other staff leave in the past year. (Ever the combatant, Lynch says that one local reporter who said the company was “on death watch” is “irrelevant and disconnected from reality.”)
In recent years, Lynch has helped engineer the acquisition of Vertica Systems by HP, Azuki Systems by Ericsson, and now Hadapt.
One bigger theme around Boston: outside enterprise companies gaining local footholds by acquiring startups and building around them. It’s not a new trend—see Oracle with Endeca and Acme Packet, and IBM with Cloudant most recently (see also Netezza).
Indeed, Lynch says Teradata (NYSE: [[ticker:TDC]]) is looking to expand its staff in the Boston area to something like 180 people, including Hadapt. He says there are plans for the Hadapt team to move into a bigger office, probably still in Cambridge.
“I’m trying to bring Fortune 500 tech companies focused on enterprise to Boston,” Lynch says, “to invest in Boston people, work ethic, and loyalty. They can hire 200 people here, and it’s almost impossible to do that from scratch on the West Coast.”
I first wrote about Hadapt in early 2011, when the Yale spinout was still based in Connecticut. The company moved to Boston later that year when it raised its first venture round.
Hadapt is led by CEO and co-founder Justin Borgman, who will stay on as a Teradata vice president, reporting to Scott Gnau, president of Teradata Labs, based in San Diego.
