Delivering on a Promise

How the Efficiency and Integrity of OpenView’s Expedited Investment Process Made All the Difference to Socrata


As Socrata CEO Kevin Merritt began to explore his options for a Series B round of financing in early March 2013, the founder of the open data solutions company knew that some of the venture capital firms he engaged would promise the moon if it meant that he signed a term sheet with their organization.

But, like many expansion-stage businesses, that’s the last thing Socrata needed. The company’s Series B raise wasn’t just about capitalizing the business, Merritt says. It was also about identifying a partner he could trust — a firm that would do what it says, rather than just talk about what it’s going to do.

“We were on a pretty tight timeline and I knew that the investment process could drag on for several months if I didn’t manage it properly or got distracted by a VC that promised to do things it couldn’t really deliver on,” Merritt explains. “Given our situation and the opportunities we were ready to go after, we had a pretty rigid deadline to close the round, and my feeling was that if a VC couldn’t align with that schedule, it might not be the best fit anyway.”

Playing Catch-Up


On March 7, Merritt officially announced Socrata’s intentions to raise a Series B round at the Montgomery Technology Conference in Los Angeles. Internally, he had made a commitment to Socrata’s employees that he’d get the round closed by the middle of June, and within two weeks, 18 venture capital firms had already shown clear interest.

To expedite the process, Merritt began grouping those firms into cohorts, ranking them based on a variety of criteria, and whittling the list down to the VCs that seemed to best align with Socrata and its long-term goals.

Then, Merritt’s phone rang.

On the other end of the line was Ricky Pelletier, an associate on OpenView’s investment team. Pelletier had been in contact with Merritt previously — once leading up to the Montgomery Technology Conference and again to schedule the call that Pelletier was now making to inquire about Socrata’s short- and long-term fundraising plans. Merritt’s answer: We’re already deep into the fundraising process.

“I felt bad because Ricky and I had spoken a couple of times leading up to my decision to raise a Series B round, but here we were several weeks into an expedited process and I was just having my first in-depth conversation with him,” Merritt says. “In a fundraising process like the one we were executing, two weeks is an eternity. Frankly, I doubted any VC could catch up.”

Still, Merritt says that OpenView’s reputation in the software community and its unique value-add model was enough to pique his interest. So, he told Pelletier that if OpenView could step on the gas and catch up to the other investors on his list, he’d be happy to continue the conversation.

The Journey from Late Entry to Frontrunner


Almost immediately after hanging up the phone, Pelletier spoke with Adam Marcus, one of OpenView’s managing directors. In a matter of days, Pelletier had set up a meeting to have Merritt deliver his fundraising pitch to Marcus.

That presentation lasted an hour, and Merritt says he was impressed with Marcus’ candor, industry knowledge, and attention to detail. “It didn’t feel like I was meeting with someone who was scrambling to get involved at the eleventh hour,” Merritt recalls. “It felt like I was meeting with someone who intimately understood our company’s situation, industry, and growth potential.”

A week later, Marcus called Merritt to let him know that he was passing the Socrata deal off to Scott Maxwell, OpenView’s founding partner. That recommendation made Merritt a little bit nervous, mostly because he knew from experience that getting on the schedule of a venture capital firm’s founding partner often takes weeks. Maxwell, however, went out of his way to expedite the call.

“When we see a potential investment partner that aligns with our strategy and fits the profile of companies we like to invest in, we don’t drag our feet,” says Maxwell, who founded OpenView in 2006 and counts a PhD in mechanical engineering from MIT among his qualifications. “Frankly, I understood Kevin’s position and sense of urgency. The last thing I wanted to do was hold up his process.”

Within days of Marcus’ call, Merritt was on the phone with Maxwell and Pelletier to perform a tech demo and discuss Socrata’s goals, aspirations, and long-term vision. A week after that, Maxwell flew to Seattle to have breakfast with Merritt.

“Honestly, that demo call was a game changer,” Merritt says. “I realized that with Scott, I’d found a guy who was wired like me. He was an engineer, he was very thoughtful and pragmatic, and he really understood the space that our company operates in. That meeting really opened my eyes to what Scott and OpenView could bring to the table.”

"Whether it’s a value-add project with the Expansion team, or Scott’s engagement with our board, the entire firm follows through on its commitments. I can genuinely say that I’m even more confident now with my decision to choose OpenView than on the day we closed the round.”

Kevin Merritt

CEO, Socrata

Going Above and Beyond the Call of Duty


By the end of April, Merritt had presented to OpenView’s investment committee and, a week later, the firm responded with a term sheet. In a little more than a month, the firm had gone from an outlier candidate to one of Merritt’s finalists, joining several respected firms known for their previous high-profile investments in companies such as LinkedIn, Skype, and Pinterest.

After some back and forth, Socrata and OpenView signed the term sheet in the middle of May. The next step in the process was diligence — a procedure that Pelletier says rarely requires more than 30 days to complete because OpenView’s team performs much of the necessary prep work (e.g., talking to a company’s customers, acquiring financial data, etc.) before a term sheet is ever presented.

That diligence process was going smoothly until, less than a week away from Socrata’s scheduled Series B close date, Pelletier’s wife went into labor. And yet, even that didn’t prevent OpenView — and, more specifically, Pelletier — from delivering on the promise to stick to Socrata’s strict timeline.

“Ricky literally drafted a substantial investment committee update from the hospital waiting room,” explained Merritt. Less than a week later, and just 90 days after Pelletier and Merritt first spoke on the phone, OpenView funded and closed the $18 million investment in Socrata.

For Merritt, Pelletier’s commitment under unique circumstances epitomized OpenView’s fundraising approach. It was well organized, efficient, timely, and detail-oriented — and, most importantly, it followed through on each of the commitments Pelletier had made on day one. Additionally, it showed Merritt that OpenView would help him meet his commitments, including his promise to Socrata employees that he would get the round closed by mid-June so the company could refocus 100 percent of its attention on growing the business. For Pelletier, this investment approach is just part and parcel of working with high-growth companies like Socrata.

“When we have conviction around a team, company, or specific opportunity, we’ll run through walls to make it happen,” Pelletier says. “We got into Socrata’s process a little later than I think we — and they — would have liked, but we played catch-up quickly and delivered on what we promised.”


5 Things that Differentiated OpenView from the Competition

While Merritt acknowledges that each of the firms on his final list were standout investors with excellent reputations and high-quality teams, there were five particular qualities that he says put OpenView ahead of its competitors:

1. Integrity

It’s not that Socrata’s other suitors lacked integrity — it’s that the integrity of OpenView’s individual team members was generally higher.

2. References

While OpenView provided some impressive references to Merritt, one independently sourced reference actually made a bigger impact — a founder who told Merritt that, despite being replaced as CEO, he was still in love with OpenView’s team.

3. Responsiveness

It’s a small detail, but Merritt says Pelletier’s responsiveness and sense of urgency while his wife was in labor was incredibly impressive.

4. Transparency

Throughout the diligence process, Merritt says he always knew where he stood. There was a constant feedback loop and if an issue or question popped up, OpenView didn’t internalize it or go dark — the firm called Merritt to discuss it.

5. Unique Business Model

Every VC says they are value-add, but none are as equipped or motivated as OpenView — with its Expansion platform, workshops, and hands-on approach — to help fast-growing companies succeed.

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