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Goldman Gets Behind Fast Grower

Irvine-based Mavenlink Inc. is scouting new headquarters in Irvine to accommodate a hiring push in the wake of raising $39 million from lead backer Goldman Sachs.

The business software maker has an option to take over the lease on the first floor at its 30,000-square-foot office at 6501 Irvine Center Drive.

Or it could relocate the company to a different property.

“We’ll move on that pretty quickly,” co-founder and Chief Executive Ray Grainger said. “The key to our growth strategy is hiring.”

Grainger in any case plans to double local employment to 250 by the end of next year, which would require a headquarters of about 60,000 square feet to handle the influx of engineers, sales and marketing personnel, administrators, customer support positions and consultants, among other jobs.

The search comes during strong demand for its cloud-based project management software—which helps service firms track personnel and resources—and after the $39 million Series D round recently led by the influential New York investment bank, which has recently targeted later-stage, higher-growth technology companies.

Goldman “really got our market and will help us execute strategy,” Grainger said. “It’s rare that we drew them into Southern California.”

The deal is already proving beneficial beyond the capital infusion. Goldman bankers have introduced potential customers to Mavenlink’s sales teams, and set up introductions to senior level executives from throughout the investment bank’s global network.

The proceeds from the recent investment round will fund U.S. and international expansion, and pay for a boost in hiring at engineering hubs in San Francisco, Salt Lake City and Boston. Mavenlink, which employs about 200, plans to add a London office by year- end, and expand to Australia and Spain next year.

About a third of its business is international, but Grainger expects that segment to generate the majority of business in a few years, given the size of the professional services market.

“Those businesses today will do about $3 trillion globally, and there are about 5 million firms,” he said. Mavenlink already has more than 2,000 premier customers in 100 countries, a roster that includes salesforce.com, Cornerstone OnDemand and Buzzfeed. Software customers—primarily a mix of marketing agencies, consultancies, financial firms, engineering companies, and architects—have at least 15 employees and pay an annual or three-year licensing fee per user.

Mavenlink’s core software offering became the most installed application in the Google Apps Marketplace in 2012 and held the ranking for a few years.

About 20% of Mavenlink’s revenue is generated from consulting and business management services, including helping companies migrate software applications.

Mavenlink has raised $84 million and has several backers from OC, as well as a number of current and former managing partners of Accenture PLC, where Grainger spent 18 years as managing partner running the technology and aerospace business from the global consultancy’s El Segundo office.

Carrick Capital Partners, which has an office in Newport Beach and San Francisco, has invested at least $26 million in the software maker. Carrick specializes in business-to-business technology companies with revenue of $20 million to $100 million and annual growth rates faster than 15% annually in markets valued over $1 billion.

Carrick co-founder and Managing Director Jim Madden interviewed Grainger—then finishing his studies at Harvey Mudd College in Claremont—about 30 years ago for a job at Accenture.

Madden was one of the first calls Grainger made in the run-up to Mavenlink’s launch in 2009, despite a 20-year stretch without connecting.

Madden liked the idea and helped him raise $7 million through through their combined networks.

Vinny Smith

One of Madden’s first calls to potential investors was to Vinny Smith, who ran Aliso Viejo-based Quest Software Inc. at the time.

Smith, who oversaw more than 70 acquisitions and investments at the business software maker, wanted to acquire Mavenlink outright for $25 million.

Talks progressed until potential earnouts, benchmarks and other conditions ultimately derailed the deal.

“We just couldn’t come to terms that was satisfactory,” Grainger said. “It just didn’t feel right for either of us.”

Quest in 2011 ended up leading Mavenlink’s $3.9 million Series A round instead. The backing included a board seat, which Quest filled by nominating Madden, who still sits on the board. The Series A round also included several notable high-net-worth investors in OC, according to Grainger.

“I’m not going to mention their names, but they would be on your annual list of the wealthiest people in Orange County,” he said.

About a year later, Quest was sold for $2.8 billion to Dell Inc. in a deal that netted Smith more than $800 million.

He used part of the windfall to launch Newport Beach-based Toba Capital in late 2012, now OC’s largest VC, with more than $400 million invested in a portfolio of more than 40 software companies.

Smith, in a move that has defined part of his investment strategy, reacquired the Mavenlink stake from Dell after launching Toba.

Toba has since upped its stake in the company.

Mavenlink’s other OC connections include one of Toba’s portfolio companies, data protection provider Interset, which subleases space at Mavenlink’s headquarters, where Smith’s teams often hold board meetings.

“There’s a synergy there,” Grainger said.

And Mavenlink in 2012 completed Aliso Viejo-based Octane’s Launchpad accelerator, which helps startups formalize business plans, initiate marketing campaigns, and learn how to access and utilize capital, among other benefits.

“We’ve been very strongly supported from the Orange County community,” Grainger said. “We will always be headquartered here in Irvine.”

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