Thoughts on the AirWatch $200 Million Series A

Atlanta-based AirWatch, LLC just announced that they raised a massive $200 million Series A round of financing from Insight Ventures Partners out of New York City. AirWatch makes mobile device management software for companies to manage all the different smart phones used by their employees. For many years, Blackberry by RIM was the main smart phone used in the corporate setting, and all the management software, along with the hardware, was provided by the same company. Now, with the explosive growth of iPhones and Android devices, the need for enterprise software to manage the deployment of these devices has grown tremendously — enter AirWatch.

With this being one of the largest venture-type Series A rounds ever (not just in Atlanta but in the the entire country!), it deserves some further commentary. Here are a few thoughts on the AirWatch $200 million Series A:

• Often when a growth equity firm puts in money they are looking to make a return of 3-5x their money in 3-5 years
• AirWatch has been in business for 10 years and hasn’t raised any institutional capital. I’m guessing their chairman, who started and took Manhattan Associates public ($1.32B market cap), had put in money personally prior to the raise (just a guess)
• AirWatch has 861 employees listed on LinkedIn (source), meaning they likely have 1,000 total employees when factoring in people that don’t have a LinkedIn profile
• With 1,000 people on staff, at an estimate of $150,000 in revenue per employee per year (investing in growth and not worrying about profitability), they likely have a revenue run rate of $150 million/year (just a guess)
• Based on a published growth rate of 40%, they likely got a pre-money valuation of 5-6 times revenue — let’s call it an $800 million pre-money and a $1 billion post-money, assuming all the money went to the balance sheet (just a guess)
• Redemption of shares by existing shareholders is likely, although not mentioned, meaning that some of the $200 million probably went to shareholders selling their shares (I’d guess they took $25 – $75 million off the table)
• Insight Venture Partners needs to generate a return, so the company will have to IPO or be sold in 3-5 years

AirWatch is an amazing company and I’m excited they’re here in Atlanta. They’re building a large anchor technology company that will spawn many more companies over the years and be great for the city.

What else? What are your thoughts on the AirWatch $200 million Series A round of financing?