Colorado Springs software developer Quantum Metric has landed $200 million in venture capital in a deal that values the company at more than $1 billion, making it the area's first technology "unicorn."
The investment from a group led by Insight Partners is the largest ever for a Colorado Springs startup, eclipsing a $172 million deal Colorado Springs-based Cherwell Software secured in 2018 with private equity giant KKR. The transaction fulfills Quantum Metric founder and CEO Mario Ciabarra's goal of building the first local tech unicorn — a startup that has grown to be worth $1 billion. Quantum Metric's software helps companies find their best online revenue opportunities.
"With this mega-round of funding, we're excited to continue our rocketing growth, and help grands navigate the ever-changing digital landscape," Ciabarra said Thursday in a news release on the investment. "We have reached this level of funding that most other startups typically reach later. I have an immense amount of gratitude for our team. This is a moment of celebration and recognition of what they have accomplished."
The investment included new stock and equity purchases from employees and other stockholders. Quantum plans to use the money to support its growth by adding new features and functionality to its software as well as expanding its product and support operations to support its growing customer base, which includes 3M, Alaska Airlines, Bass Pro Shops, FanDuel, Lenovo, Lululemon and Western Union. Ciabarra said in an interview that he hopes to expand the company's staff from 220 to 400 by year's end.
"We will be investing our product and extending it to new verticals (markets) so we can create the best product," Ciabarra said. "We will be investing in the marketing and sales function, our partner ecosystem and meeting market demand, which grew exponentially during the pandemic. We expect to more than double our revenue this year after growing nearly 100% last year."
Insight, a New York venture capital fund specializing in software firms, invested $25 million two years ago in Quantum Metric, which borrowed $25 million in October from Silicon Valley Bank to help pay for hiring 90 employees during the past three months to keep up with surging sales. Ciabarra said Quantum Metric is preparing for an initial public offering by adding chief revenue and financial officers, other senior managers and meeting financial metrics. He said the nation's financial markets have been "extremely friendly" to startups like Quantum Metric and that the latest investment and an IPO would allow the company to continue growing to meet the demand for its products.
"We are excited to double down on our partnership with the Quantum Metric team s they bring their powerful analytic capabilities to customers across the world," said Lonne Jaffe, managing director of Insight Partners. "Economic downturns have a way of shining a light on high-growth scale-ups that are particularly compelling to customers, and this year, the surging customer demand for Quantum Metric's product from customers hit hard by the pandemic, has been extraordinary."
The latest investment will help Quantum Metric design products more quickly using "continuous product design" that takes real-time customer feedback to more quickly build and improve digital products. Quantum said in its news release that the financing and valuation reflect "the increasing market demand for digital solutions to meet rising customer expectations." Salesforce.com research found digital sales jumped 71% worldwide in the second quarter and 55% in the third quarter.
Ciabarra, a veteran of three other local startups, came up with the idea for Quantum Metric in 2011, but the company didn't begin operations until four years later. Quantum Metric began selling its software in 2016 and has grown so quickly it was ranked 124th in last year's Inc. 5000 with three-year growth of nearly 3,000%. The company moved its headquarters in June from Monument to the Interquest business park to accommodate its growing staff, but the pandemic has nearly all Quantum Metric's employees working remotely. Ciabarra said a significant number of employees will continue to work remotely even after many employees likely will return to offices this summer in Denver, Los Angeles, Bethesda, Md., and London.