Two Equity Firms Make Investment in Innovative Interfaces; No Management Changes

Innovative Interfaces, the third largest North American library automation company in terms of revenue, announced today that two equity firms had invested in the company.
Innovative Interfaces, the third largest North American library automation company in terms of revenue, announced today that two equity firms had invested in the company. Terms of the investment by Huntsman Gay Global Capital and JMI Equity were not disclosed, but the companies saw an opportunity to invest in a company that “was poised for continued growth with new product offerings,” according to a statement from Innovative. “This new investment will provide the resources that will offer greater opportunities for the company's future growth," said Innovative Founder and Chairman Gerald M. (Jerry) Kline, who will continue serve as chairman of the board, according to the announcement from Innovative, which is based in Emeryville, CA.  Neil Bock will remain as the company’s president. SkyRiver Technology Solutions, a provider of library metadata, also owned by Kline, also received an investment on the same terms. Innovative, which was founded in 1978 and produces the popular Millennium ILS, announced in April 2011 that it was developing a new product called the Sierra Services Platform, which incorporates open-source tools. Innovative reportedly plans to deliver Sierra this year. Innovation’s competitors Ex Libris and OCLC have also ramped up development of next-generation products with the former’s Alma and the latter’s Web-scale Management Services. Sierra has generated remarkable interest in libraries, with 206 organizations signing contracts as early adopters, representing 700 libraries and spanning 1,615 individual branches, a number of sales almost unprecedented in this sector of the industry, according to Marshall Breeding, who manages the Library Technology Guides website and writes LJ’s annual Automation Marketplace feature (which is the source for numbers in this article). “Sierra’s been very positive,” said Gene Shimshock, Innovative’s vice president, marketing. “From the investors’ end they saw this as a growth opportunity, and they share the company’s long term focus. They see opportunities for growth in the library automation market,” he said. Shimshock also pointed to other initiatives under way such as Encore Discovery (a discovery layer), Reporter, and Decision Center. The company signed an additional 32 contracts (all to new-name customers) for Millennium in 2011, bringing its total contracts for the year to 238. "We are confident that our experience partnering with software businesses will help Innovative build on its successful track record by continuing to invest in new and refined solutions for libraries," said Paul Barber, managing general partner of JMI Equity and now a member of Innovative’s Board of Directors. Overall, Innovative has a customer base of 4500 libraries in more than 50 countries, and about 30 percent of its revenues come from libraries outside the United States. It remains privately held.
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Mark Andrews

So, Jerry cashed out. Carl Grant wrote on his blog recently about the role of venture capital in the industry. VC is not bad or wrong, but it can put corporate focus on a financial return for the principal shareholder. I argue that the corporate focus should be on the library customer, first & always, but libraries are finding technology dollars hard to get, as up-stream funding bodies - schools, colleges, and local government - are pressed to justify their spending and even their existence. If a vendor can't get money from their customer base, what are they supposed to do? Hence VC. The question for libraries re/their technology dollar is can be viewed as a balance between a) Born-digital content management and b) Legacy content management. What to do? I suggest "Save your money, keep your eyes open and wait."

Posted : Mar 06, 2012 10:05


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