Passportal began as just an idea and a simple two-page website that a few hundred IT consultants found on their own to buy a credential management tool. Less than five years later Passportal was acquired.
We asked Colin about the journey and how it began.
Founder & CEO of SolarWinds Passportal
Before Passportal, I was running an IT Managed Service Provider company that grew very quickly. Unexpectedly, we had one of our technicians leave the company. We had to scramble to gather and change all the privileged credentials to access and manage our client’s IT systems. It was a huge pain and highlighted a technical gap that needed to be filled. We looked for a credential management tool to purchase and couldn’t find one. So, we built our own, and put it out there to see if others in the industry had the same need.Two years later, with no advertising or active selling program we had about 250 customers. Our MRR was nothing, it was only $2500 or $3000 a month, just small user fees in a revenue model that wasn’t well thought out. But we decided we needed to take it somewhere or shut it down. We gave ourselves 6 months to raise an angel round to turn it into a real business. We just made it a month short of our self-imposed deadline, and after a couple strong years of growth, Accelerate Fund II decided to join the next round.
Two years after financing, Passportal was acquired by SolarWinds – tell us about how you got to that deal.
Passportal grew very fast, we were achieving triple digit growth year-over-year. Without us soliciting interest, a number of acquirers were looking at us. We listened to their strategies and how they viewed Passportal as an opportunity to expand their offering and be integrated into their business. Honestly, we may have considered too many offers.SolarWinds surprised us. We did not expect the biggest publicly traded company in our market space to feel like the best fit for all of us. They stood out with their buy in and support of Passportal’s vision and mission. They committed to let us maintain a level of autonomy while giving us access to a massive base of already established resellers, with a fit for our product in an integrated product suite. Plus, they had marketing and talent resources to ramp our growth.
They also came to play financially. They made a quick and fair offer that provided a handsome return for all the investors and a motivation for the founding shareholders to push it through.
You could have raised money in other ways and you had a financing term sheet on the table. When did the acquisition become the right move for the business and you, personally? When did you flip your heart?
We had term sheets for our Series A and we could have gone down that path. We compared that to SolarWinds’ offer and saw their offer as the fastest, lowest-risk path to get to the most customers and the most users, while achieving a great return for our investors and allow us to take Passportal to the next level.Personally, it was right for me as well. As CEO, I’ve grown two companies to a certain size and was able to do well with successful exits. What I was really interested in was the opportunity to get direct monthly mentorship from SolarWinds CEO who’s at the helm of a multi-billion-dollar international tech company and has led its growth for 20 plus years. For my own resume, my own confidence, my own ability to learn for future startups – that spoke to me.
What help was the Accelerate Fund II team as you made those choices?
You and Brad provided invaluable advice to help us weigh the pros and cons of a Series A round versus the SolarWinds offer. We learned how to evaluate a good deal, and got a reality check that you don’t always get to choose when an offer to purchase comes or who it will come from.As we went down the path of M&A, it was extremely helpful to draw on experiences from previous exits both you and Brad been involved with. We learned things to consider, what to be wary of, and even how to structure things. The perspective of real people with a strong conviction in us personally and in our business was great. And you drank beer.
You’ve always characterized Passportal as a group of friendly Canadians delivering world class technology to MSPs around world. Now you’re owned by a US mega player. Can you continue to grow from Calgary Alberta?
Part of our acquisition thesis with SolarWinds was they wanted us to hang onto our culture and team that we’ve built in Calgary which have fueled our strong track record of growth.We need to continue to demonstrate we can rapidly grow a strong technology business in Alberta: showcase our healthy pool of technical talent, fair wages, and the lower cost of operating a business here compared to other metropolises.
Our new Calgary office space blew them away – the caliber of space we could get for the cost.
And they are looking at some of the collaborative financial programs offered by the Federal Government, Province and City of Calgary who are all fairly keen to diversify our local economy. We’ll keep pushing on all those fronts to keep us here.
What excites you about what’s ahead?
The Passportal name is on the map with SolarWinds ownership. It opens up more growth opportunity not only for our business but for members on our team – to enrich all of our careers by working with a global leader.Hopefully, one day ahead, we are able to launch another successful venture in Alberta and help to mentor a whole new community of employees.
Article originally published on Accelerate Fund website, stories: https://www.acceleratefund.ca/stories/passportal/