Last October, Kinvey received the kind of validation many enterprise software companies seek: a top spot in an analysis by Forrester of mobile development platforms. In this report, the Boston startup was No. 1, beating out the likes of Amazon, IBM, Oracle and Microsoft. Not bad for a team of a few dozen people.
So with that, CEO and founder Sravish Sridhar went out to raise the company's next raise of capital — as much as $14.1 million, according to a Form D filed a month after Forrester's came out. But, after meeting Yogesh Gupta, the new CEO of a 36-year-old publicly traded company in the Boston area, Kinvey reached a different outcome: it got acquired.
Progress Software, a Bedford-based software development tools provider, announced on Wednesday afternoon that it has acquired Kinvey for $49 million in cash — a move that will unite Progress' frontend application development tools with Kinvey's mobile "backend-as-a-service" platform. The acquisition, Gupta told BostInno, will help improve the go-to-market efforts for both companies.
In an interview with BostInno, Sridhar said there were three factors that led to Progress' acquisition of Kinvey, which went through the Techstars Boston startup accelerator in 2011. For one, the company started to figure out how to win large enterprise customers like VMware, Schneider Electric and NBCUniversal. Then there was that Forrester report, further solidifying the idea that Kinvey, which now has 31 employees, could take on giants like Amazon and Microsoft.
"That really brought a tremendous set of validation for the company," Sridhar said, "because for a small startup to beat out the likes of Amazon and Oracle is really unprecedented. That got the attention of a lot of people in the industry."
After that, it was a meeting through a mutual connection with Gupta that eventually led to the deal. At first, Progress was interested in becoming an investor in the new financing round Kinvey was looking to raise. But, as both companies learned more about each other, they began to see how a tighter alliance could really work out.
Gupta said while Progress had its own backend offering, it wasn't as robust. With Kinvey's powerful backend platform, which helps companies run apps that integrate with enterprise systems, Progress could get a tool that would complement its own frontend development tools, which help companies develop the consumer-facing experience of apps.
"I get the opportunity to take the company, a strong business mainstay in the Boston tech community, and take it to the next level," Gupta said. "In the tech industry, if you don't run fast, you fall behind."
Kinvey is the second acquisition Progress has made since Gupta took over as CEO in October of last year. Gupta said while Progress' core business has been strong, it had been faltering in getting into emerging areas of app development, such as big data, machine learning, and virtual reality. So to catch up, Gupta has been leading a push into "cognitive-first applications," because "artificial intelligence and machine learning will be essential in applications moving forward," he said.
As part of the acquisition, Sridhar will serve as general manager and vice president of Kinvey and directly report to Gupta.
"What this acquisition will do is allow Kinvey to tell a much louder story," Sridhar said, adding that he likens Progress' acquisition to a large investment round that will allow Kinvey to grow its team by 30-40 percent in the near future.
