the company added more products beyond its bread-and-butter widget for websites that let users upload files from cloud programs (Google Drive, Facebook, or Dropbox, for example) rather than just their hard drive, according to CEO Pat Matthews. Filestack added features like being able to crop multiple photos or apply filters, and to upload large files quickly, Matthews says.
Filestack has continued adding features, introducing more complex tools for developers who use the service, as well as the ability for users to resume file uploads when there’s a spotty Internet connection, rather than having to restart, Matthews says. Filestack reached $250,000 in monthly recurring revenue in February—a doubling of its size before the acquisition and a 70 percent increase during the past year, he says.
“We’re becoming a real business,” Matthews says.
Scaleworks found Filestack through a smaller venture fund, Xenon Ventures, which Byrne previously ran with Jonathan Siegel. Xenon operates on the same investment model, but on a smaller scale, and was the inspiration for Scaleworks. Siegel knew Moorman because Rackspace bought his company Exceptional.io, and he introduced Moorman to Byrne. (Siegel still works at Xenon.)
The Scaleworks partners aren’t revealing the returns they expect for the 15 to 20 limited partners who invested in the fund, though Byrne did say he expects them to be comparable to private equity.
“If we do manage to grow it 50 percent a year for 3 years or 5 years, then we’ve tripled the business,” Byrne said, referring to a typical portfolio company. “Even if we sell it at the same multiple we bought, that’ll be a phenomenal return for our LPs.”
Scaleworks is opening an office for its portfolio companies in the Savoy building in San Antonio, which is owned by Rackspace co-founder Graham Weston. Moorman says the fund may make one or two more investments, and wants the companies to move to San Antonio, or at least make any new hires in the city. Scaleworks companies now employ 75 people in San Antonio (200 nationally), says Moorman, who has been an outspoken advocate of bringing more tech businesses to the city. He co-founded an advocacy group in town called Tech Bloc.
“We want to create critical mass so that they can benefit everybody,” Moorman said about housing the businesses in one office. “There’s plenty of talent here to do what we want to do. You can create loyalty and culture here.”
