Composite Software nails $12.1 million on its way to making a name
in the geeky field of enterprise information integration.
November 21, 2003
Like many entrepreneurs, Composite Software founder Michael Abbott stumbled
upon a problem that needed solving long before he bootstrapped his startup.
A Ph.D. student in neuroscience at the University of Washington, Mr. Abbotts
courses required searching for information across multiple databases.
The question was: How do you search across various genome databases
when the data is in different formats? he says. Not easily.
Eight years later, Mr. Abbott, who is 31, was still chewing over the
hulking challenge of data integration, but with an eye on relieving the
headaches that the problem causes big business. He jotted down a rough
idea of what his software would do. He started the business in fall of
2001 in his home, recruiting seven former colleagues, as well as engineers
he had previously worked with. I told them You code during
the day and Ill code at night, Abbott recalls.
In August 2002, armed with a first funding round from Palomar Ventures
that took about six months to lock down, he moved the engineers into new
office space in San Mateo, California.
Composite has come a long way since. Mr. Abbott hired veteran CEO Jim
Green in April, luring him from his job as CTO of webMethods. Composite
shipped its first product in October, an information server written in
Java that runs on a Unix, Linux, or Windows server. The company also received
a $12.1 million Series B funding round, led by Lehman Brothers Venture
Partners, last Monday.
Mr. Green, a 53-year-old, soft-spoken man with a full gray beard, had
a track record of comfortably bouncing between chief technical and management
roles. Getting him on board took some time. Mr. Abbott met with him over
pizza on weekends until he was convinced that Composites idea was
not simply an extension of what webMethods was already doing.
WebMethods software helps companies tie together disparate applications,
such as a purchase order moving through different systems on a corporate
network, to improve workflow. Composites software takes corporate
data stored within different silos say information stored in a
Siebel Systems sales application, a PeopleSoft financial application,
a Microsoft Excel spreadsheet, a bunch of email, or a section of a sales
contract and presents a single view of that data that can be stored
and reused to help make better business decisions. Getting both technologies
to work together is the Holy Grail of systems integration.
Jim [Green] said, You are trying to tackle a really tough
problem, Mr. Abbott recounts. I talked him into joining
as an advisor and helping me through some of those early venture capital
Mr. Greens ties also brought Lehman Brothers on board for the recent
deal. Lehman was an investor in Active Software, a company Mr. Green founded
in 1995. Active was sold to webMethods in August 2000 in a deal valued
at $1.5 billion, giving Lehman good reason to come knocking again. Through
the deal, Composite picked up an influential board member in Tom Banahan,
head of Lehman Brothers venture capital business.
Enterprise information integration may be geeky stuff, but the market
is getting hot. Researchers at IT market analysis firm Aberdeen Group
estimate that the market for this software which includes big corporations
that are grappling with legacy data and systems integration issues
totals $6.4 billion. Technology research firm Gartner Group now tracks
data integration as a separate market. Indeed, Composite Software has
a host of rivals, including IBM, which makes a product called the information
integrator, BEA Systems, and smaller competitors like MetaMatrix, and
Nimble Technology (acquired by Actuate in July).
Evangelos Simoudis, a partner at Apax Partners, which contributed to
both of Composites funding rounds, says Composite has the management
team to compete and win in this market. [Mr. Green] understands
this area inside and out, he says. Clearstone Venture Partners,
Palomar Ventures, and Dot Edu Ventures also participated in Composites
Series B round.
Mr. Green founded Active Software after leaving Sun Microsystems, where
he led development of the CORBA open architecture, which allows different
computing programs to communicate in a network through a standard interface.
Mr. Abbott was also former chief technology officer at Electron Economy,
a much-hyped startup founded by Joe Firmage that made e-commerce supply
chain systems. (Mr. Firmage co-founded now-defunct USWeb/CKS, where Mr.
Abbott was the head of Java development.)
Mr. Abbott says he learned a lot from Electrons ill-fated move
from an application service provider (ASP) to a software maker. At
Electron we could demo the software but we could not get the data integration
to work. The challenge at Composite, he says, was turning his idea
into a viable product. There are a lot of doctoral theses on what
we are working on, he says. At the end of the day, its
about delivering a product.
Mr. Green retains a tight relationship with his former company, webMethods.
The two companies have signed a partnership through which webMethods will
resell Composites product to its base of 1,000 customers. This
gives us a tremendous boost, Mr. Green says. If we were to
go out by ourselves and find those accounts with the lack of credibility
as a startup, it would be much more difficult. The company is also
working with consulting giant EDS, which uses Composites technology
in its own systems development.
Mr. Green says Composite will use the cash it received in its most recent
funding round to expand its sales force. Of 35 employees, Composite has
few salespeople and a lot of ground to cover, he says. Mr.
Abbott says he is confident that Mr. Green will help take the business
to the next level. I am the tech guy with the long hair doing the
white board thing, Abbott says. He is the experienced guy
building the business.