Deal Radar 2009: Surgient

Founded in 1999, Surgient develops virtualization automation and lab management software. The Austin, Texas-based company, which was previously known as Surgient Networks, entered the virtual lab automation market in mid-2004 and created an internal private cloud for which it was awarded a patent in 2005. Surgient’s ‘Virtual Automation Platform’ helps IT organizations to provide self-service computing resources to users.

More than 70 companies use Surgient’s virtualization solutions for computing environments such as  QA/Test, service request delivery, training, online demonstrations, and so forth. Customers include Merck, Raymond James, IBM, SAP, HP, Genesys, EMC, GE, Target, Microsoft, Siemens, and Intuit, among others. In an interview with David Marshall, the company said that the platform, coupled with its virtualized infrastructure, helps organizations to reduce their operating and capital expenditures while building more agile businesses. The new version of the platform, launched in April 2009, helps IT administrators reduce capital and operating expenses by 50 percent or more. The platform also allows professionals to control license sprawl, break up large hosts among several virtual pools, and allow integration with VMware vCenter.

Surgient has also partnered with other companies such as HP, Wipro, Symantec, Citrix, and others to complement its on-demand applications. In May 2009, Surgient integrated the Virtual Automation Platform with virtualized systems running on Microsoft Windows Server 2008 Hyper-V to provide IT quality assurance professionals with access to resources for testing IT services throughout the deployment process. The company offers its platform as a hosted solution or licensed onsite installation with the license pricing starting at $25,000.

Surgient faces competition from companies such as VMWare and VMLogix Inc. John Burke, principal research analyst at Nemertes Research Group, feels that although VMLogix has more mature capabilities, VMware as a competitor, does not have the strongest set of features in virtual lab management. However, Burke also believes that VMware can improve its functionality and pose a greater threat to Surgient. The company currently is doing extremely well and gaining recognition. In October 2009, Surgient was ranked the 304th Fastest Growing Company in North America on Deloitte’s 2009 Technology Fast 500. Software Magazine 500 listed Surgient as No. 372 in its annual listing the top software companies in the world, by ranked by revenue. It was also listed as the 79th fastest-growing software company in the United States, based on a review of revenue results over the past three years by Inc. magazine.

Surgient has raised more than $91.3 million so far: a $10 million Series A from Austin Ventures and private investors; a $57 million Series B from Austin Ventures, Cisco Systems, and Enron Broadband Services, a subsidiary of Enron Corp., JAFCO Ventures, Rocky Mountain Ventures, Sternhill Partners, Comdisco, Inc., and Agave Capital, LP in 2001; a $20 million Series C in July 2006 from Crosslink Capital and Goldman Sachs; and a $4.3 million Series D in August 2009 (out of which only $3 million was made available at that time) from Goldman Sachs, BlueStream Ventures, and Crosslink Capital. According to Inc.com, the company’s revenue grew from $5.6 million in 2005 to $ $20.2 million in 2008 and has a growth rate of 261%. Surgient reported that it became profitable in 2008.

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This segment is a part in the series : Deal Radar 2009