Founder of Accel Partners talks investing in Qualtrics, other Utah companies
SALT LAKE CITY — Accel Partners, a Silicon Valley-based venture capital firm, recently announced a joint investment of $70 million in Qualtrics, a corporate survey and research company based in Provo.
The firm has holdings in major technology companies like Facebook, Dropbox and StumbleUpon.
Jim Swartz, founder of Accel Partners, spoke with the Deseret News via telephone about the recent investment and what he sees for the future of capital funding in Utah.
What justifies this large of an investment in this company?
The company has actually been around for a number of years and has had great success just (because of) the sheer brilliance of the product. And the people who are running it have been able to build a fairly substantial business in a pretty short period of time just on cashflow from the business and haven’t required any outside capital. That’s a very rare thing in today’s world, and they should be very proud of that.
Is the investment based purely on the leadership of the company, or does the product have a lot to do with it?
I think all these things are a confluence of three things: the market need, a superior product and good management. It takes all three to get a company off the ground like this.
Companies are becoming more and more data-driven. Benchmarking, metrics and big data: these are all big trends in corporate America. This company is playing into those major trends with a really good product.
How big do you think this market is?
You know, you never know. I think it’s a very large market. It’s certainly big enough for us to build a very substantial company here. I think there are lots of other places that the company’s technology and management skills can apply themselves. I think it is a really open field for them, quite frankly.
If you can put a number on the current survey market that they are doing, it would certainly be a multi-$100 million market, maybe even billions, I don’t know. It’s hard to tell at this stage, but it’s certainly a very large market.
Did you approach Qualtrics, or did they approach you?
We sought them out. We have a process here where we have a staff that is constantly scouring the universe of companies out there. We approached them definitely.
I’m assuming there was some due diligence. What was that like?
This was a six- or nine-month process of lots of back and forth, getting to know each other, talking to their customers, interviewing people and so forth. We have a pretty extensive due diligence process.
We’ve probably had five or six of our partners there at different times. I’ve been there personally, and they have visited us out here in Palo Alto.
Can you explain more about your growth fund?
We have two businesses: an early stage business and a growth fund.
This investment is being made out of our growth fund. On the early stage we partner with a lot of the local venture groups.
Qualtrics is a classic example where it’s still in very high growth mode, but it’s out of the startup phase. It has a well-developed product, a well-developed market and a management team. It needs addition management, connections, help and, most importantly, capital to enable it to continue to grow rapidly.
Is this the first Utah company you’ve invested in?