Qualtrics is a classic example where it's still in very high growth mode, but it's out of the startup phase. —Jim Swartz, founder of Accel Partners
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?
No, not at all. We’ve had a number of Utah companies over the years. You know, I’m a resident of Park City. I’ve been in Park City 25 years. It’s been my residence for 15 years or so.
I wouldn’t say we’re super active in Utah, but we’re certainly aware of what’s going on there and think it’s a very attractive place to invest.
This investment is the largest in Utah and it seemingly came out of nowhere. What made this company just come out of nowhere?
There are a lot of things out there. There are a lot of nuggets out there. It’s a large investment for Utah, but certainly not a large investment for our growth fund.
It looks large because (Qualtrics) is an established growth company. It’s not an early stage company.
What will be Accel's involvement in the company?
One of my partners will be on the board, and we will have an active involvement and engagement with them to help them build the business.
Are you looking at any other companies in Utah?
I can’t comment, but yes we have a large number of companies we are in touch with at the moment. We continue to look at it, and we think it’s a very good area to be investing in.
Is it off-putting at all to invest in Utah companies? Are investors avoiding it and sticking to Silicon Valley?
Well, Silicon Valley is Silicon Valley. It’s sort of the center of the universe, right? So I think that any other geography in America has less activity. But there are certainly a handful of five or eight really active technology hubs around the country. I would certainly put Salt Lake in that category, I think moreso over time. In the years that I’ve lived there, it’s just gotten better.
Do you ski a lot?
Yup. We love skiing. Except last winter wasn’t so great. We didn’t live up to our reputation last winter, but no one else did either.