Medgate Strengthens its Push for a Top Three Market Position with Strategic Investment from Norwest Venture Partners, Georgian Partners and BMO Financial Group
Medgate, which was assessed as a leader in the 2016 Verdantix Green Quadrant benchmark of EH&S software applications, has received a strategic investment led by silicon valley-based private equity firm Norwest Venture Partners. Canadian growth-equity firms Georgian Partners and BMO Financial Group also invested. The investment combined both buy out capital and an injection of working capital. Rob Arditi and Jon Kossow of Norwest, Steve Leightell of Georgian Partners, and Shanti Atkins of NAVEX Global will join the board of directors.
Verdantix heard from Medgate CEO Mark Wallace that they plan to use the new capital for aggressive product development and business expansion efforts. Specifically, Medgate will augment functionality for risk management, big data, predictive analytics and environmental management. The door is also open to making acquisitions using the additional capital. The Verdantix view is that any acquisitions made by Medgate with the current funding are unlikely to be more than small bolt-ons. But given the scale of the Norwest Venture Partners fund, larger acquisitions are a real possibility in the future. Growing the Medgate product footprint across the full range of EH&S workflows is well-aligned with current customer requirements for a single, integrated platform.
Why did Medgate, a firm with high brand awareness, recognized leadership in occupational health and industrial hygiene, organic revenue growth above 30% per year in the last 3 years and annual EBITDA growth above 30% in the last 3 years decide to take investment? To emerge as a top three vendor in this market by 2020, all midsize vendors must raise capital in 2016. Last year Intelex received a $123 million investment led by JMI Equity, UL acquired cr360 last month and the IHS EH&S software assets are being marketed for sale, most likely to a private equity buyer. The influx of capital can not be ignored by software vendor executives. Midsize vendors, with between 150 and 500 employees, will not be able to compete over coming years if they do not raise additional cash.
The market is at an inflection point so past trends and long-held beliefs are a bad basis on which to make decisions for the future. Verdantix predicts that in 2016 there will be at least one investment or acquisition announcement per month with the April to May period likely to be very busy.