Ionic, a software startup founded a decade ago by two University of Wisconsin-Madison alumni, has been sold to OutSystems, a Boston software firm that said it was valued at $9.5 billion when it raised capital in February 2021.
OutSystems announced its acquisition of Ionic Monday and did not disclose the terms. Originally founded as Drifty Co., Madison-based Ionic will continue to operate independently.
The deal comes amid an uncertain economy in which nationally, startup exits are down almost 50% compared with historical norms. There were an estimated 302 U.S. venture capital exits in the third quarter of 2022, including three in Wisconsin, according to a recent report by PitchBook and the National Venture Capital Association.
It's a win for Wisconsin's emerging startup ecosystem to see a local company like Ionic go from founding to a successful exit, said Scott Resnick, a Madison entrepreneur and founding member of StartingBlock Madison.
"Ionic is one of the staple Madison startups," Resnick said. "Many folks look up to that team to say that you can build a tech-related product right here in the city."
Founded in 2012 by Max Lynch and Ben Sperry, who are both from Shorewood, Ionic has raised at least $18 million from investors — including Arthur Ventures in Minneapolis, General Catalyst in the Boston area and Techstars. It doesn't have any Wisconsin-based investors, according to Crunchbase.
"I’m amazed at what we’ve been able to accomplish with a relatively modest amount of funding over the years," Lynch wrote in a Monday blog post about the acquisition. "I’m thrilled at the prospect of such a significant investment in Ionic."
Larry Bohn of General Catalyst said the firm was "fully supportive" of Ionic's decision to sell the company and declined to comment further.
Ionic is a platform that helps software developers make mobile applications. Its technology powers hundreds of thousands of apps, including for major companies like Southwest Airlines, H&R Block, Instant Pot and Target. More than 5 million developers and 4,000 paying customers use Ionic, according to the company.
The company's technology was "groundbreaking to the development community," said Resnick, who co-founded the midsize Madison software firm Hardin Design and Development.
OutSystems was founded in 2001 and has more than 1,700 employees globally. It's a leader in low-code development solutions for enterprise customers including Mercedes-Benz, Humana, Takeda Pharmaceuticals and the Wisconsin Department of Corrections. Its investors include global investment firms Goldman Sachs (NYSE: GS) and KKR (NYSE: KKR).
