SolarWinds, an Austin, Tex. network management company that claims to be rapidly growing at the expense of larger rivals, has picked up the assets of a smaller company in the same business, New Zealand-based Kiwi Enterprises, for an undisclosed sum.
Despite a ten-year history, SolarWinds, which makes software to help operate and maintain corporate networks, got its big start two years ago with an investment from Bain Capital and Insight Venture Partners, according to chief product strategist Kenny Van Zant. Earlier this year, the company filed for an IPO, although it has delayed going public due to the recession.
Despite holding off on the IPO, Van Zant says the company’s business of selling network management software against competing products like HP’s Openview and IBM’s Tivoli is booming. By the end of 2007, SolarWinds’ revenue was over $60 million with high operating margins, and Van Zant says it’s now over $75 million a year.
The secret is keeping down customer acquisition costs and offering an alternative to the expense-heavy enterprise software model.
The story has been much the same in other segments of the software industry, of course. Every software startup, from geeky programming-oriented firms to business blockbusters like Salesforce, has claimed to be in reach of major revenue by eating into the enterprise software sales of a few big companies, including HP, IBM and Cisco.
But Van Zant says that growth in his part of the industry isn’t slowing due to the recession, and several expanding startups may have enough cash flow to make acquisitions. SolarWinds has made three to date.