VETRO Inc., the Portland-based developer of cloud-based broadband mapping and fiber management software for the telecommunications industry, has raised a $12 million round as it seeks to capitalize on a growing international market for broadband services.
The Portland-based company, which was a 2019 Maine Startup to Watch, announced the equity round Wednesday morning.
“It’s been pretty remarkable,” Will Mitchell, VETRO’s CEO, told Maine Startups Insider. “When you’re living it, it feels like an eternity, but when you look back it’s really only been three or four years where we’ve built something from scratch. This product didn’t exist until 2017 and we bet the farm on it.”
The product in question is VETRO FiberMap, a cloud-based software-as-a-service (SaaS) platform specifically for Internet service providers (ISPs) and telecom companies to help them actively map, manage and expand their fiber networks. While the big players like Verizon and AT&T have the resources for custom enterprise solutions, VETRO has targeted the small- and medium-sized ISPs that are investing in regional fiber networks, especially in suburban and rural areas. Some early users of the VETRO FiberMap product were GWI in Biddeford and Pioneer Broadband in Houlton.
The company has also begun selling into the government market, recently announcing it has signed a contract to provide its software platform to the ConnectMaine Authority, a public agency whose mission is to facilitate the universal availability of broadband across the state.
While raising a substantial amount of venture capital puts more pressure on the company to scale and show big gains, Mitchell said it feels like a natural progression.
“We’ve got this unbelievable team and this foundation and market opportunity that’s calling for us and the product,” he said. “It’s a big turning of a page going from an incremental next step to an exponential next step and having the capital to fuel it. I’ve been raising money since 2016 and I don’t need to think about that any more for the foreseeable future; we can focus on execution and growing the business.”
Not only will the capital help fuel the growth, but Mitchell said its new investor, Baltimore-based Resolve Growth Partners, will also be an incredible help.
“They bring not just a check, but a playbook and the resources to grow,” Mitchell said. “They focus on B2B SaaS companies in highly vertical markets, so we’re totally in their strike zone.”
Resolve is investing approximately $12 million into VETRO. Resolve is a relatively new VC firm and VETRO is its sixth investment from its first fund of $160 million, according to Chris Rhodes, one of Resolve’s partners.
“Our two goals are providing growth capital to B2B SaaS companies and helping them with best practices and accelerating growth,” Rhodes told Maine Startups Insider.
Betting the farm
Before developing VETRO FiberMap as a SaaS product, Mitchell and his co-founder Sean Myers ran NBT Solutions, an industry-agnostic GIS mapping firm that built custom mapping solutions for clients across numerous verticals, including environmental services, telecommunications, and healthcare. But they eventually got sick of chasing projects and recreating the wheel for every client.
One of the most active verticals was telecommunications as ISPs were looking for innovative mapping solutions to help them more efficiently plan, build and manage fiber networks. So in 2014 Mitchell and Myers pivoted, diverting development resources to creating a cloud-based mapping software platform specifically for ISPs to help them actively manage and expand their fiber networks. In 2015, they unveiled an early version of VETRO FiberMap at a tradeshow in Texas. The company eventually went all-in on VETRO FIberMap and hasn’t looked back.
“We pulled it off and we’re now in a market-leading position in our space, which is undergoing tremendous growth pressure as a whole; internet infrastructure is in high demand,” Mitchell said.
The global broadband services market size was valued at $326.7 billion in 2019 and is expected to grow at a compound annual growth rate of 9% over the next several years, reaching $647.17 billion in 2027, according to a market-analysis report from Grand View Research.
Those market conditions are one of the things that attracted Resolve to VETRO, Rhodes said.
“VETRO fits right into our core thesis. They’re a modern SaaS platform that plays in an attractive market segment,” Rhodes told MSI. “That’s exactly what we look for in portfolio companies.”
Financing details
While Resolve is investing $12 million, the round represents $8.25 million in new cash for VETRO because Resolve is spending $4 million to buy shares on the secondary market, providing a liquidity event for early investors such as Maine Venture Fund, CEI Ventures, and Maine Technology Institute, according to Mitchell.
Mitchell wouldn’t disclose a pre- or post-money valuation for the company, but called it “substantial” and said the company has doubled its annual recurring revenue each of the last three years.
“They’re definitely happy,” Mitchell said of the early investors.
VETRO raised a $1 million seed round in 2017 and just over $1 million in bridge capital between 2017 and 2020. Last year, it raised $2.5 million in the depth of the pandemic as the trend toward remote work demonstrated how important expanding broadband access to homes had become.
VETRO currently has 50 employees, about double its team size less than two years ago when Maine Startups Insider named it one of the 2019 Maine Startups to Watch. Mitchell said the company is scaling quickly and has an additional five employees joining in June. Its employees are in 10 states, but the majority of them (33) are in Maine, Mitchell said.
Rhodes said he and his partner love non-traditional tech hubs like Portland, while they actively avoid investing in California-based companies. He said Maine is a great place to build a SaaS company because people want to live there and the “phenomenal” quality of life.
“Portland is one of our geographies where we actively hunt for SaaS companies,” he said.
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