Francisco Partners buys majority stake in SmartBear

Private equity firm bets on the expanding API economy and invests in provider of tooling for automated testing

California-based Francisco Partners has bought Insight Venture Partners out of its shares of SmartBear, a US technology firm that creates tools for software test automation, acquiring a majority stake in the company. Francisco Partners is a private equity firm that specialises in investments in technology businesses and that has raised over $10 billion, invested in more than 200 companies.

According to Brian Decker, principal at Francisco partners, it is SmartBear’s API tooling portfolio that made it a particularly attractive investment option: “The company [SmartBear] has an especially impressive leadership position in the rapidly growing API lifecycle management space with its flagship open source products, SoapUI and Swagger.”

While terms of the deal were not made public, a company press release states that SmartBear has seen a “double digit” growth rate for more than five years. A 2016 report by market research company 451 Research estimates that the company generates nearly $100 million in annual revenues.

SmartBear was originally acquired by Insight Venture Partners in 2007, along with the Russian firm AutomatedQA and Denver-based Pragmatic Software, and the three companies were merged into SmartBear.

Since then, Insight Venture Partners – a venture capital and private equity firm that specialises in high-growth software – has overseen the expansion of SmartBear from a single-product firm that specialised in user-interface testing, to a test tooling specialist that provides a range of products and, according to the company, 20,000 customers.

SmartBear’s product portfolio includes TestComplete, QAComplete, Collaborator, AlertSite and CrossBrowserTesting, as well as API design and testing tools such as SoapUI and Swagger

According to a company press release, Francisco Partners will support the company’s growth which has been driven by an expanding API economy and demand for application lifecycle tools.

“We are excited to be working with SmartBear as the company embarks on its next stage of growth,” said David Golob, partner and CIO at Francisco Partners. “The company stands at the intersection of two powerful trends in the software industry: the advent of the ‘API economy’ and the movement toward grassroots team-based and individual purchases of software in enterprises.”

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