Earlier this month, Shorewood native and Madison entrepreneur Max Lynch sold his mobile application development startup Ionic to Boston software firm OutSystems.
The companies didn't disclose the terms of the deal but "everyone is very happy, both with the financial outcome but also the strategic fit," Lynch told Wisconsin Inno.
The opportunity to sell Ionic came out of a potential partnership the two companies had been working on, said Lynch, Ionic's co-founder and CEO. The acquisition process took around six months, he said.
Lynch, a University of Wisconsin-Madison computer science graduate who started Ionic with co-founder Ben Sperry in 2012, said his biggest takeaway from successfully selling Ionic was the importance of maintaining relationships with other companies in the industry.
"Companies in any market are probably not talking to each other enough because there are a lot more opportunities to work together than people realize," Lynch said. "All it takes sometimes is one little email and a short conversation to realize, 'Hey, there's something here.'"
Lynch noted that it can be challenging for companies to casually interact without forging a formal partnership and that partnerships can sometimes be a distraction for startups.
"With OutSystems, we kind of knew that going into it," Lynch said. "We said, 'partnerships are so hard to get right, we don't want to be distracted by it,' but ... I think we can talk about something more tangible, which is an acquisition."
Ionic, which has around 100 employees, will continue to operate independently and will maintain its headquarters in downtown Madison, Lynch said. He estimates around 25% of Ionic's staff are in Madison and said the entire team works remotely, although they maintain their Madison office.
But while Lynch chose to keep his startup in Madison because he enjoys living there, he said its headquarters location isn't relevant to the company's success.
Ionic raised a total of around $18 million from investors, all of which were based outside Wisconsin, Lynch said. Ionic tried raising money from Wisconsin investors around 2013 or 2014 but Lynch was turned off by what he perceived as a lack of sophistication on the part of local investors, he said. But he also noted that the state's venture capital landscape has improved since then.
On the flip side, Lynch said he didn't expect to raise money from Wisconsin investors just because his company is based here.
"I just try to tell founders ... 'Don't lead with location — it's not what's unique about you.'" Lynch said. "I think building a company in Wisconsin is incredibly viable ... (but) don't make location the most interesting thing about your company because it's not."
Among other tips for other startup founders, Lynch said "put off scaling your team and raising money for as long as possible. ... Don't raise money to invest in figuring it out."
