Let’s start from the end – negotiating and signing a complex transaction via Zoom is not the “optimal” way, and after over 30 years in the business it was a first for me personally and definitely one for Viola’s history books. No doubt the fact that it happened in the challenging business environment of COVID-19 is a testament to the company’s strength and strategic value.
But let’s get back to the beginning – 15 years ago we made an A Round investment in OptimalPlus, which was led by Danny Glotter – the company’s capable founder and CEO (from the beginning to date) and his partner Nir Erez (who left a few years later to start Moovit.) The vision was to transform semiconductor manufacturing and testing by using big data analytics. This was a compelling vision and a strong team.
It was a long journey, with great achievements, but not without challenges.
In its first decade or so, the company built an impressive business in this space, serving most of the largest fabless chipmakers globally with a strong recurring software business model but a somewhat limited TAM.
In recent years, the company re-positioned itself and expanded its growth strategy and target markets, which was instrumental to its prospects and eventual acquisition. Let me try and share some of our key takeaways:
Going multi markets-multi products
As investors focusing on building significant and transformative companies, we believe in ambitious growth strategies. After a company achieves strong initial traction, it has to continuously seek to broaden its TAM and strategic value. This is often achieved by expanding offering to multiple products and targeting more than one market.
As I mentioned, OptimalPlus started as a manufacturing and testing analytics software business with a focus on the semiconductor industry, and specifically targeting fabless chipmakers.
It was clear that beyond expanding its offering to the semiconductor industry, the company needed a larger TAM.
OptimalPlus first identified the electronics market as a natural progression, and then looked further and found the automotive industry as a major opportunity with significant potential.
As cars become more complex and more reliant on thousands of electronic components, it became evident that this would also pose a complex global manufacturing challenge. While initially it looked like OptimalPlus’ products are very industry-specific, in fact the amazing architecture and big data capabilities built by the company proved to be extremely valuable for manufacturing of any sort.
It was clear that this was a great opportunity, but also a BIG bet. Not an easy strategy – but done right, it could lead to significant value for the company.
Execution was key – Danny championed a separate startup within the company that was able to move quickly, understand market needs, and make product adjustments which quickly gained real and impressive traction.
Adjust your offering, open architecture
With the decision to open new markets, OptimalPlus also needed to adjust its products offering. One of the most significant decisions the company made was shifting from a closed box solution to an analytics-centric, modern, highly scalable and open platform that is broadly applicable to a variety of applications and industries and can become the backbone of modern big data analytics.
While it was a major undertaking, this massive development was key to the company’s success. It was able to expand its offering within the semiconductor industry by adding exciting new products, and to offer its solution to large IDMs.
This was also a testament to semi being not only about chips, but also about software and data analytics supporting this industry, and at Viola we have some very interesting companies in our portfolio today doing just that.
Today, OptimalPlus is analyzing data from over 100 billion devices annually.
Your potential acquirer is NOT necessarily who you think it is
Not every company can become an independent public company and strategic sale is a very important part of the industry. The process of identifying the right buyer and achieving the best value is key to success, and something I have a personal passion for.
The common wisdom is “companies get bought not sold”. To me, identifying your exit strategy is not done just by hiring a banker or waiting for an offer. It is about a disciplined, patient, strategic process of understanding the value you bring to major players in your market and in adjacent markets. You need to proactively identify your potential partners and acquirers, understand their vision and roadmap, and build the common offering that will fit their strategic vision.
Over the last 18 months, I worked closely with Danny and his fantastic team on a structured and proactive strategic process in which we sought best-suited partners or acquirers that could create a synergetic offering once integrated with OptimalPlus.
After an intense process that included several high-profile companies, many of which were not obvious choices and were not even aware of OptimalPlus before this process, we found quite a few interested parties. Notwithstanding the global COVID-19 outbreak, which forced meetings over the last few months to be held almost entirely via Zoom, NI concluded its acquisition of OptimalPlus.
NI is a great company and a fantastic place to work, which has always been very important to us, as we feel employees are our key partners and important stakeholders in the company.
It’s all about the founders and the team!
OptimalPlus had great investors along the way. We did the A Round with our friends from Pitango and over the years we had KKR, Evergreen and Aviv join the ride. We also had an exceptional Board of Directors under the great leadership of Ken Levy – but for me it’s all about the team!
Danny was able to build a very strong management team and the company demonstrated excellence in every aspect. Especially impressive was their ability to learn quickly and move into new markets, new technologies and learn new skills.
At the center of all this is Danny, who deserves by far the most credit. I have worked with many founders over the years and Danny is a standout – a strong leader, a visionary, and a strategist. He is direct, honest, learns quickly and has strong ethics. With immense drive and passion, Danny led us through this long journey and brought it to a successful end.
Viola and a personal note
We had several partners from Viola on the Board. The original investment was done by my long-time partner Harel Beit-On (now at Viola Growth) and I replaced him on the Board. Ori Bendori also served on the Board on behalf of Viola – thank you Harel and Ori!
On a personal note – I came back to the Board two and a half years ago at the request of Danny. We worked very closely on product, strategy, management and the exit process. We had a great time – I enjoyed seeing the company develop and fulfill its potential. I could not be happier for Danny and the OptimalPlus team today!