A Silicon Valley investor with a track record of profitable exits in the technology industry has taken a minority stake in Irvine-based software maker Pics Auditing LLC for $35 million.
Pics plans to use the cash infusion from Palo Alto-based Norwest Venture Partners to further its global expansion and beef up product offerings.
“Our customers are multinational, and they want us to be all over the world,” said Chief Operating Officer Jared Smith.
The company targets large companies in the oil and gas, petrochemical, and mining industries, among others, with software that automates contractor credentials and municipal approvals and aggregates performance reviews.
“We’re between Angie’s List and Dun & Bradstreet,” Smith said.
Undisclosed Stake
Pics was cofounded nine years ago by Smith and Chief Executive John Moreland, and it had not received any outside investment before sale of the undisclosed stake to Norwest. The company employs about 90 people in Irvine, where it handles engineering and development, and houses corporate executives and customer service at its 20,000-square-foot headquarters. It employs about 150 companywide, and has plans to hire an additional 30 to 60 people fluent in foreign languages in the next year.
The company now has employees who speak 27 different languages in its offices in Houston, Canada, U.K., United Arab Emirates, Germany, France, South Africa, Japan and Brazil, among other locations.
The privately held company does not disclose financial data. It said it has recently seen growing demand from government agencies, the defense sector, manufacturers and the paper and pulp industries.
Its clients include United Technologies Corp. in Hartford, Conn., London-based BP PLC, Motorola Solutions Inc. in Libertyville, Ill., and the city of Riverside.
“Every year the total size of the market grows, and our customers grow,” Smith said.
Those were two significant factors Norwest weighed before making the investment, according to Managing Partner Jon Kossow.
Data-Driven
The firm, which invests in a cross section of industries in various stages of development, has recently targeted companies with data-driven business models.
Pics fit that mold and met other criteria on Norwest’s checklist.
“My team focuses on profitable companies,” Kossow said. “We like businesses that have large markets, strong management teams and very strong organic growth.”
Norwest will take two board positions and Pics’ management will be retained.
Norwest manages more than $3.7 billion in investments. It has funded more than 500 companies in its history spanning five decades.
Industry Ties
Pics was attracted to the firm’s deep industry connections, established record, and expertise in scaling production.
“This is Silicon Valley money,” Smith said. “This is a high-profile, prestigious company’s third-party verification that we’ve got a really good opportunity ahead of us.”
Norwest leverages its extensive distribution and supplier network for its portfolio companies and has already introduced Pics to new potential customers and channel partners in the U.S. and internationally.
“We have a large global network of contacts,” Kossow said. “We really add tangible value in addition to the capital.”
The Pics investment is at least the third time Norwest has made a play in Orange County. In 2011 it invested an undisclosed sum in The Retail Equation Inc., an Irvine-based data analytics provider that provides services for retailers.
It also has backed Irvine-based ClariPhy Communications Inc. since 2004, participating in its first fundraising round and ensuing investments.
The networking chipmaker has raised more than $50 million to date. Norwest wouldn’t disclose its total investments in the company, but a spokesperson for the firm said it was the largest investor.
ClariPhy makes chips that allow for the transfer of data at speeds up to 100 gigabits per second, an emerging market driven by demand for video, music, photos and other data on phones, tablets and other devices.
Exits
Norwest’s most-recently disclosed big payoffs include 2010’s $763 million sale of Mountain View-based Playdom to Burbank-based Walt Disney Co. and 2009’s $405 million buy of Austin-based LifeSize Communications by Logitech.
Norwest invested some $4 million in Playdom and $19.1 million in LifeSize.
