Jun. 12–AMHERST, Ohio–Pragmatech Software has raised $12 million in venture capital funding, the company announced Wednesday, but it took a different path than many software companies.
During the high-technology boom, when companies were taking seed money from venture capitalists and burning through it, Pragmatech abstained.
Now that the company is pulling in $10 million a year in revenue and has been making a profit for a few years, it is accepting $12 million from three Boston area-based venture capital firms, Commonwealth Capital, Kodiak Venture Partners and North Bridge Venture Partners.
“I know, it’s a bit like the world tipped on its head, but our case is different, said Brooke Savage, Pragmatech’s co-founder and chairman. “We didn’t need seed money. We needed working capital to expand.”
The company plans to use the money to expand its engineering and product marketing operations and to increase its sales force from 15 to about 30.
“We really want to raise our visibility,” Savage said.
At the same time that it received the first round of funding, the company also announced a new president and chief executive officer. Al Noyes is replacing Savage, who will retain the chairman title.
“I’m good with startups and bringing companies to the $10 million level, where we’re now, but I recognize that I don’t have the experience of bringing a company to the $100 million to $150 million level. Al does,” Savage said. “He has a broader background. I have worked closely with Al for the past nine months and am confident that he can help drive Pragmatech to greater success.”
For example, Noyes took the reins of a small software company called Chipsoft when its core product, TurboTax, was bringing in about $15 million a year.
“He took it public and when it was at about $500 million a year, Intuit bought it,” Savage said.
Savage and his wife, Melissa Mabon, started Pragmatech in their Amherst home in 1994 using money Savage saved up from his software job with Coda Corp. in Manchester. The company now has 80 employees worldwide, with 60 in its Amherst offices.
“The resources and expertise of these world-class investors will enable us to better address the needs of our customers on a global scale, provide continuous enhancements to our suite of solutions and increase the visibility of our company in the marketplace,” Savage said.
The venture capitalists were equally enamored of Pragmatech.
“As a company that was self-funded for a decade, developed best-of-breed proposal automation software, and was able to grow profitably even in this difficult technology environment, Pragmatech exhibits multifaceted strengths in its management and corporate vision,” Elliot Katzman, a partner with Kodiak Venture Partners, said in a written statement.
“We were tremendously impressed by the loyalty of Pragmatech’s customers and their overwhelming support for the company’s products.”
With the venture capitalists taking some seats on the board and Savage ceding the president’s job to Noyes, the founders are giving up some control over the company, but Savage said he would continue to play a large part going forward.
Pragmatech develops and sells software that simplifies the process of responding to “request for proposals” — sales documents that companies request when they are interested in buying something.
Pragmatech’s flagship software, The RFP Machine, integrates a company database with Microsoft Word. The program’s appeal is its ability to cut down the time it takes to respond to requests for proposals to minutes using software that anyone who knows Microsoft Word can use, Savage said. It also keeps such documents consistent throughout a corporation, he said.
The software has become popular in industries where requests for proposal responses can be complex, often composed of hundreds of pages, Savage added.
“Pragmatech has proven its ability to deliver best-of-breed proposal automation solutions to a loyal and broadening customer base,” Noyes said in a written statement.
“I look forward to furthering Pragmatech’s position as the leading innovator in the sales-effectiveness and proposal-automation sector and continuing to increase the value our solutions provide to customers.”
Noyes served as chairman of the board at Excelligence Corp., a profitable, $100 million company. Prior to that, he held executive positions at companies such as Smarterkids.com, net.Genesis, The Mesa Group, Symantec and Chipsoft/Intuit. He has a master’s degree in business administration from Dartmouth College’s Amos Tuck School of Business Administration as well as a bachelor’s degree from Dartmouth.
Pragmatech serves more than 1,800 customers in financial services, banking, healthcare, telecommunications, legal, insurance, technology and others.
While based in Amherst, it has offices in San Francisco, Dallas, Atlanta, Chicago and New York. It also has subsidiaries in the United Kingdom and Australia.
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