Cherwell Software president is promoted to CEO
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Private equity giant KKR has bought out most of Insight Venture Partners' stake in Colorado Springs-based Cherwell Software LLC in a $172 million transaction, the biggest venture capital deal for a Colorado Springs company, giving KKR a majority interest in Cherwell.

KKR bought a $50 million stake in Cherwell early last year, while Insight pumped $25 million into the company in 2012 and was its largest shareholder until the transaction was completed.

Insight retains a significant interest in Cherwell as well as a seat on the company's board of directors.

KKR has a seat on Cherwell's board held by Vincent Letteri, director of its private equity and technology, media and telecommunications industry growth team. It will get two more seats on the board, which also includes Cherwell's three founders.

"This resets the clock for Cherwell with an investor at the front end of their investment. Insight had bought into Cherwell in 2012, and venture capital funds like to exit their investments in five or six years," company founder and interim CEO Vance Brown said. "Now we have complete alignment of all parties.

"We want to be a high-growth company, and this will continue to fund our growth strategy. KKR is the largest private-equity company in the world, and we believe they can help us execute and scale Cherwell and give us more global visibility."

Cherwell's management and owners want its annual revenue growth plus profits to total at least 40 to 50 percent, resuming the surging growth rate that hit 50 percent in 2014 before slowing recently, Brown said.

Privately held Cherwell doesn't disclose revenue or profit numbers. If the company again grows at those rates, its workforce of more than 450 people should easily double over the next five years, with much of the growth coming at Cherwell's Colorado Springs headquarters, he said.

The $172 million deal, which includes a small cash infusion into Cherwell, is nearly triple the size of the previous largest local venture deal - $60 million invested into Springs-based email provider USA.Net in March 2000, according to data compiled by Dow Jones VentureSource.

New York-based KKR, which manages nearly $170 billion in private equity and venture investments, made the investment from its $711 million Next Generation Technology Growth Fund, which invests in technology, media and telecommunications companies that include ride-sharing giant Lyft and daily fantasy sports competitor FanDuel.

KKR was started in 1976 as Kohlberg Kravis Roberts & Co. by Jerome Kohlberg and cousins Henry Kravis and George Roberts. It's best known for its 1989 acquisition of RJR Nabisco, subject of the best-selling book and hit movie "Barbarians at the Gate."

"Cherwell is a leader in its industry known for its highly adaptable, high-quality solutions, which enable customers to transform their service management capabilities. We are thrilled to invest in the company, which we believe has enormous potential for growth," Letteri said.

Brown, who also is chairman of Cherwell and had been its longtime CEO, returned to the CEO post temporarily last month when his replacement resigned after 16 months on the job. Brown said the company plans to name a permanent CEO by year's end.

Cherwell was started in 2004 to develop and sell software that keeps computers. network and other information technology equipment running properly. It now operates offices in Denver, Seattle, Tampa, Fla., Australia and Europe.

The company moved its headquarters three years ago to Colorado Springs' InterQuest Corporate Campus, a former computer storage manufacturing plant, to consolidate several offices and allow for expansion.

Brown, Tim Pfiefer and Arlen Feldman were former executives from software developer FrontRange Solutions before it was sold and moved its headquarters from Colorado Springs.

Cherwell's "evolution into a global technology company in a little more than 10 years is one of the state's high-tech success stories," Gov. John Hickenlooper said in the release.

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Contact Wayne Heilman: 636-0234

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Business Writer

Business Writer