XoraGearworks, two venture-backed companies that make mobile business applications, announced today that they're merging. The companies say that by combining into a single entity (also called Xora), they'll become far-and-away the top competitor in the market.
Both companies specialize in location-based mobile business applications -- applications used to track employees and equipment and to help manage your workforce. Gearworks president and chief executive Todd Krautkremer says the deal came after he tried to raise a new venture round earlier this year and discovered the fundraising environment was less than hospitable.
"The cost of capital has changed dramatically," Krautkremer says. "I could raise capital, but with it we could not significantly change the trajectory of the company. It really needed to be in conjunction with a merger."
So Gearworks started looking for the right merger, and Xora seemed to be it, he says. The two companies had roughly the same number of customers (8,500 for Gearworks, 7,500 for Xora) and were "roughly the same size [in] all key metrics, with the exception of revenue and profitability." Those last two are some pretty important differences, of course, which is why the new company will be called Xora, will be headquartered (like the old Xora) in Mountain View, Calif., and will be led by Sanjay Shirole, co-founder and chief executive of the old Xora. Krautkremer will be leaving after a transition period.
Now, with the combined product lineup, combined deals with mobile carriers, and a new total of 17,000 customers, Xora is much bigger than competitors like TeleNav Track, say Krautkremer and Xora co-founder Ananth Rani. That lead, plus the emergence of more GPS-enabled mobile devices, puts the company in the right position for even more dramatic growth, Rani says.
"When you look at the combination of Xora, Gearworks, and some of the competitors that we're leaving behind, there's a total of about 300,000 to 350,000 subscribers deployed," he says. "Just in the blue-collar trade verticals, we have about 21 million mobile workers. As you can tell by the ratios, penetration is not even 5 percent. This is just the beginning of the opportunity here."
Prior to the deal, Xora raised a total of $11 million from, while Gearworks raised $36 million since it started focusing on location-based business applications. With the merger, the companies have raised another $8.5 million from their venture backers: Dawntreader Ventures, BlueStream Ventures, Split Rock Partners, and Rho Ventures.