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Vbrick Raises $20 Million Financing Round

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Vbrick Raises $20 Million Financing Round
    

By: -
18 Jun 2018
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Enterprise streaming solutions provider Vbrick today said it has raised $20 million in new financing, giving the company a fresh war chest earmarked specifically to fuel expanded sales and marketing efforts.

Vbrick said the new round of financing is led by Morgan Stanley Expansion Capital with participation from existing investors Acme Nova and Adams Capital.

The Herndon, Va.-based company will use the funds to double its annual budget for marketing initiatives and to expand its staff of sales representatives in North America, Europe and Australia, said Vbrick Chief Executive Officer Shelly Heiden

The primary goal with the financing is not to position Vbrick for an exit sale, Heiden said. Rather, the current focus is on driving accelerated growth in annual recurring revenue that result from the sale of multi-year-subscriptions to hosted versions of its enterprise streaming platform.

“Our board and our investors are confident that this is the time to invest in the growth of the business,” Heiden said. “We would not have raised this money if we were looking to sell the business.”

Vbrick, one of the pioneers of the enterprise streaming segment, has enjoyed a renaissance in recent years thanks primarily to a growing partnership with Cisco. Since 1995, Cisco has sold Vbrick streaming platforms via its reseller channel and direct sales force. After Cisco’s decision to cease support of its former Show and Share streaming solution, the Vbrick solution has emerged as the primary streaming solution that Cisco offers its customers.

Vbrick reports that it has added more than 300 new customers and has more than doubled annual subscription revenues for its Vbrick Rev hosted portal solution since 2015. In the past year, the company was named Cisco’s Global Independent Software Vendor Ecosystem Partner of the Year.

The new round is the latest in a long line of financing for the private company that launched operations 20 years ago. During its first decade of operation, Vbrick was powered by more than $60 million in venture capital investment. More recently, the company raised $5 million in 2012 and $12 million in 2008. Terms of the current financing round – and the valuation placed on Vbrick in this investment – were not disclosed.

Even with the fresh round of financing, Heiden said Vbrick will not invest in any dedicated efforts to expand in the Far Eastern market – where countries such as Japan and China have emerged as viable targets in recent years for some Vbrick rivals. The key for Vbrick, Heiden said, is to focus on regional markets where the company is already well established and has room to expand.

“For me, it’s a matter of focus,” Heiden said. “If we get too scattered, we are not going to be successful. There’s so much white space in Europe, North America and Australia, we might distract ourselves from significant opportunities if we tried looking at the Far East right now.”

What I think

Vbrick and its investors appear determined to make lightning strike twice, with efforts in play to duplicate the success that investor Acme Nova had with Learning Management System vendor Plateau Systems. Acme shepherded Plateau’s embrace of cloud solutions almost a decade ago – a path that ultimately lead to the sale of Plateau to SuccessFactors in 2011 for $290 million.

Now, Acme and Heiden (a former key Plateau executive) are striving to repeat the feat with Vbrick – transforming the one-time vendor of encoding appliances into a developer of hosted streaming platform solutions. Five years after taking the Vbrick helm, Heiden has Vbrick’s “cloud story” firmly in place. The relationship with Cisco has supplied Vbrick with a steady source of new customers and revenue that are helping its cloud offering reach critical mass. With the tough work out of the way, Vbrick now turns its attention to juicing the sales model.

Despite Heiden’s protestations otherwise, boosting sales certainly would create the opportunity for a Vbrick exit sale down the line. Cisco would be the obvious candidate, but a burgeoning sales pipeline could bring other suitors out of the woodworks.  Vbrick has the product. It has the money. Now, one question remains: Can it execute on the sales front? Once it cashes that $20 million check, the clock starts ticking.