PeopleMatter Gets Financial Boost from Silicon ValleyMatt Tomsic / SC Biz News
A Silicon Valley venture capital firm is injecting $14 million into PeopleMatter, making a first-of-its-kind investment for a Lowcountry tech firm.
Morgenthaler, the venture capital firm, manages funds totaling $3 billion and has funded more than 300 companies that focus on information technology and life sciences.
The firm's investments include Apple; Siri, which was acquired by Apple; Nextel; and Verifone, which was acquired by HP, among many others.
The investment doubles the total amount of investment funds PeopleMatter has received. Investors put in $7 million in September 2009, then $7.2 million in April 2010.
Nate DaPore, president and CEO of PeopleMatter, said North Charleston tech firm will use the investment to accelerate the next generation of the company's products.
The deal also marks the first time a major Silicon Valley firm has made such an investment in a Charleston company. While many high-tech firms have been born here, including Blackbaud, Benefitfocus and Automated Trading Desk, the lack of attention from the heart of the high-tech industry with its wash of venture capital has been considered a weakness for growing companies in the Southeast.
"Morgenthaler is one of the oldest and largest venture capital firms in the Valley," DaPore said. "They are a leading, high-tech, very successful venture firm."
The deal ends a four-and-a-half month process that began in October, when PeopleMatter began approaching investors.
DaPore said company officials spent the first half of the process on the West Coast and met with roughly 12 venture capital funds.
"Then, when we narrowed the field down to four funds, we had them visit us," DaPore said. "We were very impressed that they would get on a plane and come all the way over to Charleston to see us."
DaPore said the meetings were fun and gave the company a chance to showcase its culture and products.
Eventually, PeopleMatter chose Morgenthaler, a company that was interested in funding PeopleMatter because of its team and its success, which DaPore said includes three product launches in less than 18 months.
"Those were big appeals to them," DaPore said.
An independent study also highlighted the benefits of PeopleMatter software, which helps service industry businesses manage and integrate their hiring, training, scheduling and other management needs.
Nucleus Research studied a convenience store that used PeopleMatter's products and found the average annual benefits were $842,374.
The Parker's convenience store chain used the software to improve hiring practices and improve documentation of new hires, according to Nucleus Research. The study found PeopleMatter helped the chain avoid replacing an average of 117 employees per year, while the technology also increased the collection of Worker Opportunity Tax Credits, which rose from seven to 70.
DaPore said the study and other data was included in the due diligence process so the firms knew the results clients were seeing.
PeopleMatter was founded in 2009 and began in the Charleston Digital Corridor. Now, the company is at the Navy Yard at Noisette and is planning a move to Upper King Street, a decision PeopleMatter announced in October. The company will spend $18.8 million to renovate a dilapidated building and plans to employ 265 people at the new site during the next five years.
At the ground breaking, DaPore said Charleston can become a knowledge industry hub –- dubbed "Silicon Harbor" at the event by DaPore and Charleston Mayor Joe Riley –- in the Southeast, and companies like PeopleMatter, Blackbaud and Benefitfocus have the opportunity to shape the industry here.
DaPore said Morgenthaler's investment reinforces Charleston's potential to become a tech hub, and the venture capital firm might be looking for other opportunities in the Lowcountry.
"I think it continues to strengthen the bridge between Silicon Valley and the Silicon Harbor," DaPore said. "It certainly continues to further the connection between the two."