Deal Watch: VCs invest 15 million in Jive Software

GNAWING ON A RED VINE, Dave Hersh, who recently negotiated a $15 million venture capital investment in his company, strides through Jive Software’s Portland offices with the confidence of someone who knows he’s got a good thing going.

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GNAWING ON A RED VINE, Dave Hersh, who recently negotiated a $15 million venture capital investment in his company, strides through Jive Software’s Portland offices with the confidence of someone who knows he’s got a good thing going. The cubes he passes are buzzing and even though it’s late in the day, Jive’s 70 or so employees are still working hard: The company’s break room — equipped with a beer tap, ample snacks, bean bag chairs and Xbox console — is empty.

Settling into a comfy leather chair, Hersh explains how the company didn’t actually need to take venture capital. “We’ve done this profitably since day one,” is how he puts it. But earlier this year Jive, which has made handy and popular software tools since its inception in 2001, launched its Clearspace product, and orders doubled in the space of three months. Clearspace unifies all the social software at play in a company — wikis, blogs, online discussions and so on — into one easy-to-manage portal.

“We had more leads than we knew what to do with,” says Hersh. He and the rest of the management team saw that they could either continue to grow at a gentle, profitable pace or they could raise some venture capital, staff up a sales and marketing team and go big. “We said: ‘Let’s sprint.’”

And sprint they did. In a matter of months they had a term sheet from Silicon Valley-based Sequoia Capital. Maybe you’ve heard of some of their investments: Apple, Yahoo!, Google and YouTube, just to name four.

(Did he talk to Oregon VCs? Only conversationally. Jive wanted the software industry expertise that Hersh says just isn’t available among local investors.)

The money puts Jive in a position not only to hire more employees to keep up with demand but also to make what Hersh calls “tuck-in acquisitions” — that is, if Jive comes across a company with a complementary technology, they might just buy them.

Coincident with its capital raising, Jive
is on track to bring in $15 million in revenue this year. Not bad for a company that gives away all its source code. Jive is living proof that a software company can do very well, thanks very much, selling software that
is, if you’re a big enough geek to know what to do with source code, technically available for free.

CHRISTINA WILLIAMS

List researched by Mark Druskoff                   ND=Not disclosed

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