Oversight Regulations Expand Market Options for Software Firm
By TRAVIS PURSER
Staff Reporter
Many companies are cowering under the recently enacted Sarbanes-Oxley Act. Accruent Inc. is trying to capitalize on it.
The eight-year-old Santa Monica firm, which develops software for managing licenses and purchasing agreements, has adapted its offerings to help public companies comply with the new federal law that steps up government oversight of public companies.
The broader application for its core product drew renewed interest from investors, which in November put in $10 million in second-round venture financing.
“I don’t think there’s any question that contract management software can address those kinds of (regulatory) issues,” said Glen Barnard, chief executive of Denver-based Constellation Real Technologies Partners, which invested $1.5 million in the most recent round.
Accruent, started in 1995 by Mark Friedman, its president, makes software that analyzes contracts and helps businesses comply with their terms. “Typically, big companies are very good at negotiating terms and conditions. But the irony is the better the terms are, the harder they are to enforce,” he said.
Lately, Friedman said Accruent’s customers have been looking for help complying with Sarbanes-Oxley.
“It’s been very, very topical for us,” he said.
Friedman said Accruent’s software gives companies a clearer picture of the obligations and risks in their contracts, at the same time making reporting to the federal government easier by helping managers organize and present that information.
“One of the things auditors are saying is, ‘Give us a copy of every material contract, period,’ because that’s where all the bodies are buried,” he said.
Among the new customers Accruent landed with its Sarbanes-Oxley-tracking software is Rite Aid Corp., which became a customer in September, Friedman said. (Rite Aid executives would not comment.)
Bruce Meikle, managing partner of enterprise and risk services at Deloitte & Touche, said software might be able to help executives comply with Sarbanes-Oxley, but until the Securities and Exchange Commission fully implements the act, probably in late 2003, it will be too early to assess how effective software would be.
Friedman founded Accruent in his home with $50,000 in credit card debt. Over the years, the company has grown to 60 employees.
Its 150 corporate customers, which include Wells Fargo, Fluor Corp., Hertz, Lockheed Martin Corp. and Sempra Energy, pay from $100,000 to $1 million for Accruent’s software.
Accruent got its first round of venture financing, also $10 million, from Innocal Venture Capital of Costa Mesa, Red Rock Ventures of Palo Alto and Pequot Venture Partners of New York in 2001.
Sierra Ventures of Menlo Park led the current round of financing with $5.5 million. In addition to Constellation, other new investors included Peninsula Equity Partners of Menlo Park and Stanford University.
