The big announcement out of San Mateo and Maidenhead was Alfresco’s raising of 45 million in growth capital from SageView. Combined with 20 million still in the bank from early funding efforts prior to 2007, Alfresco now has approximately 65 million available to pursue expanding their already impressive presence in the ECM market. Full press release is available here. This post will share some of our thoughts on the investment.
Why Alfresco pursued the investment
Doug Dennerline, Alfresco’s CEO, came on board with Alfresco 19 months ago to take Alfresco to the next level. Initially, under the stewardship of John Newton (Documentum co-founder), founder and now Chairman, John Powell (Business Objects) and Paul Holmes-Higgin (Docmentum lead engineer), Alfresco has had impressive results as a software company out of Maidenhead, London and is growing at roughly 30% per year as an independent company.
From talking with John and Paul this morning, “We introduced Alfresco with the open source model that gave us the ability to disrupt the market were we could punch above our weight. We were able to go to places that content management had never been before while solving problems that had never been solved with ECM before. With this money and Doug’s leadership, we feel we can substantially continue to disrupt the industry at a even greater scale. “
Doug’s charter was to scale up the operations of Alfresco as a solid Silicon Valley company that can compete on equal footing with the bigger, legacy players. Doug’s first move was moving the company’s headquarters to San Francisco. Based out of the Valley, Doug and his team have been able to better pursue high-tech relationships for both customers, partners and investors. The majority of engineering work still takes place in Maidenhead and London under Newton’s and Holmes-Higgin’s stewardship. One side benefit of this arrangement has been a consistent and reliable product improvement engineering cycle compared to other legacy ECM vendors based out of the Valley where we have seen extreme product changes (requiring client rework) and client dissatisfaction due to a high-turnover of tech engineers and product managers.
Doug and his team pursued the investment to continue to compete and beat the bigger, legacy players. While we don’t hear it as often, clients are often still stuck in the “bigger is better” mode when comparing Alfresco to Documentum (EMC) and FileNet (IBM). While it might be tempting to say that IBM or EMC could easily give 65 million to their ECM efforts, why would they invest in a division that is losing market share versus other initiatives? We would counter that Alfresco is better positioned in that they have access AND CONTROL of their capital while other Legacy vendors have to compete with divisions to receive and retain any funding. Growth companies like Alfresco have a significant advantage over Legacy ECM vendors that are often treated as cash cows within bigger organizations.
What to do with the money?
Doug has been fairly clear in that Alfresco is going to continue to invest in sales and marketing to get to a broader enterprise audience while also investing in new products. New products will span hybrid-cloud opportunities in information intensive industries including government, financial services, manufacturing, health care, media/publishing and high tech. As a partner, we see the efforts to continue to bolster sales and engineering capabilities while expanding the partner network for services. All of us in the partner network are looking forward to the next steps.