VC partner steps in to run data replication startup, presumably to execute exit strategy

April 20, 2005

3 Min Read
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Today, three months after his VC firm led a funding round for NSI Software Inc., Dean Goodermote took over as CEO for the data protection software company (see NSI Gets New CEO).

Goodermote, a venture partner at ABS Capital Partners, replaces NSI founder Don Beeler as CEO of the 14-year-old Hoboken, N.J.-based company. ABS led NSIs $7 million C funding round that closed in January (see Software Players Get Sales Ammo).

Sounds like he wants to make sure the money gets spent correctly. Goodermote says he became CEO because he’s liked what he’s seen of NSI since ABS first invested in 2002. “I always knew I might go off to one of our portfolio companies,” Goodermote says. “NSI is doing well -- that’s why I’m interested. Don wanted to move out of the business, but he’s advising me on strategic issues.”

Before joining ABS in 2001, Goodermote ran several software companies. His track record doesn’t give much of a clue into what direction he might take NSI. While Goodermote was CEO, biopharmaceutical software company Clinsoft merged, Internet software company IPworks was sold to Ericsson AB, and he took enterprise management startup MRO Software public.

Which way does he see NSI going? “There are similarities to all those companies,” he says. “They’re companies that have been this size and grown to a bigger level.”With fresh funding, Goodermote says his top priority will be to bring NSI to profitability. That suggests an IPO. Yet he also wants to raise NSI’s profile, which is often a sign that a company wants to be acquired.

“We’ve been expanding our presence commercially, but we had been silent in marketing for years,” he says. “We have to get our story out with people in the street.”

NSI’s DoubleTake replication software sells primarily through partnerships with Dell Computer Corp. (Nasdaq: DELL), Hewlett-Packard Co. (NYSE: HPQ), and smaller companies. NSI claims more than 4,000 customers and over 12,000 licenses on Exchange. According to IDC analyst Bill North, NSI has done well for a small company in a crowded space.

“Of all the companies out there their size, they’re executing well,” North says. “They’ve positioned themselves nicely for a takeover or possible public offering. I suspect the motivation [for the CEO change] is more toward deal making than improving operational issues.”

NSI apparently has been heading in this direction for a while. In an interview with Byte and Switch last October, Beeler said the company’s strategy was to continue growth and then consider its IPO or acquisition options (see Don Beeler, CEO, President, and Chairman, NSI Software).Goodermote says NSI will add two product releases later in the year, and he hopes to build up more partnerships such as one announced today with IP SAN startup String Bean Software Inc..

The competition is heating up in data protection. Besides battling traditional software giants Veritas Software Corp. (Nasdaq: VRTS) and EMC Corp.’s (NYSE: EMC) Legato, NSI faces a stream of new contenders into the replication space (see Replication's All the Rage).

“It’s a healthy market now, and competition and healthy markets go together,” Goodermote says. “You have to take the good with the bad.”

— Dave Raffo, Senior Editor, Byte and Switch

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