News items come and news items go and, for most of Cleveland, Ohio, and the Midwest, news of the recent $66 million Series E financing of TOA Technologies by Technology Crossover Ventures has probably receded into the past. After all, we’re in the age of the immediate, where sustained writing (and thinking) has been replaced by abbreviations, limits on character (the written kind), and attention spans no longer than the flicker of a neuron. We are, as my brother Dave would have it, in the era of “twitterature.”
But the TOA financing deserves a second, deeper look for what it says about the company, Ohio, and the Midwest entrepreneurial ecosystem.
To begin with, this is the largest venture capital financing for a software company in the history of Ohio. Sixty-six million dollars is a lot of money for a company to raise, especially without shareholders being diluted to oblivion. What could so much money be used for? It must be that the company has growth prospects that a tier-one venture capital firm thinks are worth funding. And it must be that the valuation of the company was sufficient that shareholders were willing to take some dilution in exchange for accelerated growth.
How about that Series E thing; what does that mean, anyway? It means that the company has raised five rounds of capital from smart investors, including Early Stage Partners, Draper Triangle Ventures, Intel Capital, Sutter Hill Ventures, and now Technology Crossover Ventures. To raise so much money from so many quality investors, the company must be on to something. Right? What could that be?
The TOA Technologies Web site says that the company “takes a unique approach to scheduling, routing, and managing mobile workforces of any size.” Perhaps that’s it. Employees are no longer tied down by location, but empowered by mobile devices to work anywhere at any time. Yet they still need to be coordinated, scheduled, managed and–above all–connected. They need to communicate with each other, the office and—most importantly—customers. That’s where the TOA platform comes in, and as the trend towards mobile employees accelerates, they are in the sweet spot of the market.
One manifestation of the trend towards mobility is that technology companies are increasingly exploring the Midwest for their investments, operations, and acquisitions. Google has opened offices in Pittsburgh and Ann Arbor. SalesForce bought ExactTarget (another TCV investment) in Indianapolis. The quality of life in the Midwest is good, the cost of living is reasonable, the universities are excellent, the transportation infrastructure is strong, and employee turnover is low. This last one is worth considering: some Silicon Valley companies experience annual turnover as high as 50%; employees get bored, or go off to start their own companies, or are lured away by a company with more money. It’s hard to build a sustainable business with that kind of turnover. Silicon Valley investors are recognizing this, and that is one reason they’re willing to look to the Midwest.
Do these events mean that the Midwest has come of age as a technology center? It’s still early, but the answer is probably “soon.” Today, with vision, passion, and effort, you can build a great technology company anywhere. Yuval Brisker, Co-Founder and CEO of TOA Technologies, is eloquent on this point in this video interview with Bloomberg News: Click here to see the video.