It didn’t take long for former Quest Software Inc. Chief Executive Vincent “Vinny” Smith to get back to business.
Smith cut ties with Dell Inc. in the wake of its $2.4 billion buy of the Aliso Viejo-based software maker. His next move: Toba Capital, an Irvine-based venture capital firm that has at least one former Quest colleague on its management team.
Smith is a partner at Toba, which is expected to file documents with the Securities & Exchange Commission in January. The firm is looking to invest in the “next generation of IT infrastructure,” according to a source with knowledge of Toba’s fund.
“Our team members all have histories of entrepreneurial and industry success, and we’re committed to providing considerable operational expertise to our portfolio companies,” said Wilder Ramsey, an associate at Toba who formerly held corporate development roles at Quest.
Toba has made at least one local investment, leading a $4.5 million funding round for Irvine-based security software maker SecureAuth Corp.
Smith “is proud [that] he got us as one of his premier companies,” said SecureAuth founder and Chief Executive Craig Lund. “He believes we’re going to be the next great security company.”
Revenue
SecureAuth is on pace to double revenue this year to $10 million. Its two-year revenue jump of 900% through June landed the company the No. 6 spot on the 2012 Business Journal list of fastest-growing private companies based in Orange County. Its subscription software verifies the identities of people in a company who are allowed to have access to physical and virtual networks. The software links the user to a particular device on the network.
The company counts nearly 400 customers, including drug makers, retailers and other large companies.
Big clients include Sony Pictures, the Dillard’s retail chain, Oppenheimer Funds and Marvell Technology Group Ltd. SecureAuth has secured more than 100 new contracts since June. Recent accounts include Electronic Arts, TiVo and medical device maker Boston Scientific Corp.
SecureAuth also has made gains in the public sector with deals with the U.S. Department of Energy and Department of Defense.
It has other offices in Portland, Cleveland, New York, Chicago, Atlanta and Dallas.
$18M
The latest fundraising effort brings its private investments to more than $18 million. The $4.5 million round will fund new hires in marketing, sales and finance, as well product development and commercialization, according to Lund.
“The time is right to hit the bit and go aggressively to market,” Lund said.
Smith’s connections to SecureAuth date back to early 2011, when Quest took a stake in the company. The value of the undisclosed investment was pegged at less than $10 million. Other early backers included executives from Newport Beach-based Acacia Research Corp., which licenses technology.
Smith, who became Quest’s chief executive and chairman in 1997, was an avid investor and acquirer while at the helm of the company—one of OC’s largest software makers. He oversaw more than 40 acquisitions there. His own stake in Quest—he owned about 34% of the company, worth an estimated $800 million in the sale to Dell—started with an investment his company, Insight Capital Partners, made in 1995.
Smith, who keeps a low public profile in Orange County, has avoided the spotlight since Dell began courting Quest in March.
Negotiations
Negotiations were contentious throughout the process, according to well-informed sources. They hit a critical point last June at the Fairmont Newport Beach when Smith told Dell software boss John Swainson and mergers and acquisitions head Dave Johnson he wouldn’t accept an offer for the company of less than $28 per share.
Dell hit the number and a deal was sealed a few weeks later, netting shareholders an additional $200 million.
Smith has opened his wallet of late, giving a $1 million donation in October to Irvine-based nonprofit Fuel Freedom Foundation.
The foundation is developing “cheaper, cleaner, American-made replacement fuels,” according to the organization. It was founded earlier this year by Quest cofounder Eyal Aronoff and Joseph “Yossie” Hollander, chairman and founder of Washington, D.C.-based nonprofit Our Energy Policy Foundation.
In November the Business Journal reported that Smith gave a $1 million donation to Gen Next Foundation, a Newport Beach-based nonprofit that focuses on global security, education and economic opportunity.