Tuesday, May 26, 2009
Interview with John P. Raeder Jr., IQNavigator
IQNavigator (www.iqnavigator.com) develops software used to manage outsourced projects, contractors and other services. Headquartered in the Denver suburb of Centennial, Colo., the company has grown immensely since its inception. We recently spoke with John P. Raeder Jr., IQNavigator's president and chief executive, about his company's growth and success, as well as how the firm is targeting acquisitions in a fragmented industry.
How did IQNavigator come into being?
John Raeder: We launched the company in late 1999 with eight technologists and myself and revised the business plan to focus on what we believed was a very interesting business opportunity.
And what was that?
John Raeder: To change the way intermediary staffing companies and recruiters did business with the Fortune 500.
How did you accomplish that?
John Raeder: We focused on a [software-as-a-service] platform to automate every element of that staffing-and-services supply chain, from sourcing and fulfillment to contract management and supplier relationship management to invoicing and payment. Prior to IQNavigator, it was principally a manual effort across each of those different activities.
How many employees do you have now?
John Raeder: We have 200 employees headquartered in Denver, but we also have a growing base of employees in Europe and Asia-Pac based on the fact we now do 40 percent of our business outside of the U.S. This international growth is accelerating far more rapidly than our U.S. growth.
To what do you attribute your overall growth?
John Raeder: There are four key growth drivers. The first is international expansion. The second is further penetration of our Fortune 500 client base (which we've penetrated by approximately 15-20 percent).
The third driver is focused on our expansion outside contract labor into other key categories of services spend. Those categories, or sweet spots, are IT, offshoring/outsourcing, legal, management consulting, field services and facilities maintenance. [Those are] what we call complex projects.
The fourth growth driver is focused on our M&A strategy. We recapitalized the company last June with one financial partner, GTCR out of Chicago, which believed in our management team and our strategy of targeting certain competitors and consolidating this fragmented industry.
How is your industry fragmented?
John Raeder: Our industry is known as the contingent workforce management sector. It's made up of legacy staffing companies using their own proprietary tools and other venture-backed point solutions for contingent labor. This is really where IQNavigator has transformed this industry from a point solution for contingency workforce management into a vendor-neutral services procurement solution.
Just how fast are you growing?
John Raeder: We're growing in every dimension across every financial metric. In Q1, we delivered 260 percent growth in sales bookings, year over year. Fifty-five percent of that business was closed outside of the U.S.
And you don't expect things to slow down?
John Raeder: Each of those four growth drivers I mentioned should create extraordinary growth opportunities for the company in 2009 and forward into 2010 and beyond.
I see that growth includes new digs.
John Raeder: Yes! We're thrilled to be moving [Memorial Day] weekend to a new, world-class headquarters in Denver. This signifies 10 consecutive years of revenue growth and really underscores our commitment and mission to be the No.1 technology company in Colorado.
We'd been in [our previous] building for 10 years, and we had grown to the point where we were housed in five suites that were on separate floors. It was highly inefficient.
Last June, you landed $140 million in equity funding from GTCR. How were you able to pull off one of the largest software financings of 2008 in this economic climate?
John Raeder: We came to a decision point with our former venture capital syndicate. We were interested in pursuing different paths: our venture investors wanted liquidity, and management wanted to grow a billion dollar enterprise software company.
From there, we jointly decided to hire investment bankers, and management interviewed a number of financial sponsors through our due-diligence process to align vision, strategy and the future. GTCR was the obvious choice for management.
Did the search last long?
John Raeder: The process of closing the $140 million financing took approximately 60 days from our first meeting with GTCR. Subsequently, we now have a true partnership and true goal congruency in our execution of building IQNavigator into a billion-dollar enterprise SaaS business.
Earlier, you mentioned M&As being part of the company's growth strategy. Anything in the works on which you can comment?
John Raeder: I'm supremely confident that, with GTCR backing us, we will execute on our inorganic growth strategy over the next 12-24 months. Also, I ultimately believe that, when the markets self correct, IQNavigator will be well positioned for an IPO.