Accel Invests $30M in LightSpeed, and the Top VC Was the One Doing the Wooing

By Sarah Lacy , written on June 11, 2012

From The News Desk

A Facebook doesn't come along every day. Or even every year. We get about one per decade, in fact. So when you are the big five firm who was smart enough (read: lucky enough) to do the $100 million-priced round, you can dine out on that for a while before you have to hustle again. That's particularly true when you throw in an (admittedly less sexy than originally thought but still public) Groupon for good measure. Get comfortable on the top of that Midas List, Jim Breyer. You might be there a while.

But oddly enough Accel Partners isn't acting like a firm on top. It is acting like a paranoid group of scrappy kids desperate for the hit that will save the firm. If you are a certain kind of company, you don't come to Accel. If it wants you, Accel comes to you. And a team of partners pitch you hard. They bond with you. They drink Fernet with you late into the night. They print up t-shirts for you. They woo you like Richard Gere in "Pretty Woman," minus the bit where the creepy business partner tries to pay you for sex. The hotel, dinners, jewels, shopping, making you laugh and feel special kind of Richard Gere in "Pretty Woman".

But it's a very specific company that gets the RG treatment. And it's not the hot "Ooooooooooh! Pinterest!" next, big social networks getting it. It's not even companies in the Valley at all. It's wonky, little-known, boostrapped enterprise deals that just so happen to be putting up monster numbers. These companies are almost always outside of Silicon Valley and frankly don't need Accel's money. But, oh does Accel want to give it to them.

And while Facebook is a once-in-a-career grand slam even for the best investors, this category will be the triples and home runs for Accel. That's a nice hedge in a consumer world that's increasingly binary. More important: These deals are all being led by people who are not named Jim Breyer. Hope you are sitting down, Silicon Valley, because we might actually see an example of succession planning working at a top Valley venture firm.

This was the model for Atlassian -- a hotly sought after company that put its financials in a Dropbox folder and told investors they had one meeting and one bid. Good God did Accel's Rich Wong woo Atlassian. Atlassian's founders weren't coy. They told investors what they wanted. Only Accel listened and made them that offer. Other firms used it to start a negotiation. Those firms lost the deal.

Atlassian's internal slogan is "DFTC" or "Don't Fuck the Customer." It knew it picked the right firm when a stodgy European partner for Accel showed up to a meeting in "DFTPC" -- or "Don't Fuck the Portfolio Company" t-shirts.*

Accel did this with 99designs, it did this with Qualtrics, and it did this with Braintree. They flew to Budapest for Prezi. They flew to Helsinki for Rovio. Time after time Accel is digging up comparatively old companies  -- by Valley standards -- who are bootstrapped and don't need its money. And it is Richard Gere-ing its way into huge dollar sized series A-deals, that the firm hopes will become multi-billion dollar wins.

For the last six years the world has been obsessed with consumer, but that doesn't mean interesting business-to-business companies weren't started. They just largely weren't started in the Valley or nurtured in the venture system. So Accel is finding them and belatedly grabbing many of them.

They are announcing another one of these deals tonight. Like many of those above, you may not have heard of it. It's called LightSpeed, and Accel is giving them a $30 million series A. It uses Macs, iPads, and iPhones to create high-experience sales and retail management tools to help brick-and-mortar stores deliver a glitzy enough experience that people actually get off their butts and come into stores to shop. Kinda what Apple did for the Dell-direct-efficiency-loving computer industry. Accel's General Partner leading growth investments Ryan Sweeney is joining the board. He's also on the board of similar investments like Qualtrics and Braintree.

LightSpeed was started in 2005 in Montreal by software designer and CEO Dax Dasilva. He's been an Apple developer since he was 13. In 2002, he wrote software to help manage several stores for an Apple reseller. The chain went under, but other people wanted that system. He built a new souped up version of it and sold it to a furniture chain, then a spa, and it just expanded from there. As Apple has released new products, LightSpeed has continually added to its product line to take advantage of them -- and it's purely bootstrapped itself along the way.

With a staff of just over 50 people and an army of resellers, LightSpeed has a whopping 10,000 retailers on the system, one-third of which have joined in the last year. And large chains like Nordstrom are starting to experiment with their systems in select stores. The best part? These glitzy, high-touch, smart systems tap into existing back end systems via APIs. No need to rip out legacy systems.

How badly did Accel want this deal? Badly. Several of its VPs and partners flew 11 hours to Montreal to woo them every two weeks over the past few months. They went in cognito to a user conference, where they made up fake identities to get the skinny from customers and resellers. They called posing to be retailers to see how good the resellers were. And when they heard that resellers' biggest gripe was that LightSpeed wouldn't let them invest in the product? Well, then they really wanted in.

And when Dasilva finally accepted and told his staff the news -- four of Accel's partners flew out to be there. They threatened to jump in the pool in suits at the announcement and all rode around Montreal in Dasilva's muscle car afterwards. I'm not kidding. It was as if they'd won their first deal. "There was such natural chemistry, when the first VP visited, we didn't stop talking until 3 or 4 am and I think we went to four different night spots," Dasilva says. (Dasilva: "I would have stayed for two thousand." Accel: "I would have paid four.")

This is mostly a story about Accel's Richard Gere-y-ness, but that shouldn't distract from how legitimately interesting LightSpeed is as a company. It's a strong beachhead in the long tail of Apple devices taking over foot soldiers of the enterprise world. "Apple is changing industries one at a time, even when they are not focused on it," Dasilva says.

While everyone else focuses on trying to be the next Instagram, this is the long tail of Apple that few other companies are explicitly building huge companies in.

  • I'm shamelessly ripping this idea off and totally making "DFTR" t-shirts for PandoDaily staff for our next offsite.

[Disclosure: Accel is an investor in PandoDaily.]

[Illustration by Hallie Bateman]