E-mail security vendor Proofpoint announced Tuesday its acquisition of the Canadian on-demand e-mail archiving company Fortiva, forging a new alliance built on scratching each others’ backs and similar cultures.
“We were initially focusing on security features like anti-spam and anti-virus, and now outbound encryption,” said Andres Kohn, vice-president of technology with the Sunnyvale, California-based Proofpoint. “But the trend is moving to more hybrid deployments that need flexibility when you’re pushing out to the data centre. Plus, people want more archiving to keep up with regulatory trends and U.S. regulations .”
The software-as-a-service aspect, along with Fortiva’s e-mail archiving functionality, was a perfect fit, according to Kohn. “We could have built our own technology, but that would take too long and require more experience in that area than we have.”
Fortiva (which did not disclose the selling price of the company) will maintain the same reporting lines and day-to-day functions, but be run as a separate business unit under Kohn. It will maintain its Toronto offices to cash in on the talent available in the GTA, where there is slightly less competition for top talent than in the oversaturated Californian market, Kohn said.
Acquisitions in the e-mail market are becoming increasingly common as the space catches on in the enterprise, said research analyst Vince Londini of Info-Tech Research Group. Over the last year, Google bought Postini, Dell bought MessageOne, and Autonomy bought Zantaz.
“Anytime a market experiences explosive growth like e-mail archiving is now, a lot of players get in,” said Kieron Dowling, president and CEO of the Toronto-based e-mail archiving appliance vendor Jatheon Technologies . “There’s a lot of companies in the e-mail sector now, so it makes sense to add a service offering, and their customer base also probably has requirements around e-mail archiving as it becomes a must-have due to record retention and data discovery rules and regulations. What you’re going to see over the next three to four years is more consolidation and more new players.”
Fortiva needed Proofpoint, too, to combo up and appeal to more customers. Said Rick Dales, vice-president of product management with Fortiva: “E-mail archiving, while valuable, is just one piece. We needed someone with those existing relationships.”
Said Londini: “E-mail archiving as a service has not exactly limited growth, but its value is higher up. By adding it to a suite, it’s one more facet and part of a continuity.”
Fortiva has around 250 customers in the mid-market (between 1,000 and 5,000 customers), but were finding it hard to scale out to appeal to a wider range of buyers with the big bucks. “From the acquirer side,” said Kohn, “We wanted to take that technology and really see it pushed out.” Dales said the investment structure at work in the Canadian start-up market is also problematic.
“When it comes to venture funding, there’s money to be had when you’re getting established, but not necessarily to be aggressively expanding,” said Dales. This is in contrast with the mindset in the United States, he said, where venture capitalists—especially those in Silicon Valley—are more eager to invest for growth.
Both men foresee a happy future together, however, in large part due to the similar cultures at the companies, where creativity and innovation are valued, and, while small teams and hard work are standard, stodginess is out of the question—Kohn gave his phone interview from an office that had been plastered with hundreds of ice-cream cones as a prank to welcome the new staff on board.
