Everyone is aware of South African IT success stories Dimension Data and Datatec, both which are now multibillion-dollar businesses serving clients in markets across the world.
Now another technology company with strong local roots — one founded and led by a pair of South Africans — is following in their footsteps.
With almost no fanfare, Mimecast — founded by South Africans Peter Bauer (CEO) and Neil Murray (chief technology officer) — was listed on the Nasdaq stock exchange in New York late last year.
It now commands a hefty market capitalisation of US$466m, or about R7,7bn.
The company, a specialist in cloud-based corporate e-mail solutions, raised $78m through the listing and intends using the cash to bulk up its operations, invest further in research and development, and continue a rapid expansion into the vast US market.
Brandon Bekker, who heads Mimecast’s South African office, says the company has deliberately kept a low profile until now, while it builds its business and its portfolio of products.
But with the Nasdaq listing, which took place on 18 November, Mimecast is now hoping to attract much more attention. Bekker says people are often surprised to discover just how big the company really is, given its relatively low profile. In the year ended March 2015, it reported revenues of $116m, or about R1,9bn, and employs 650 people in 12 offices around the world. It is due to report its maiden results as a listed company in the coming days.
Founders Bauer and Murray both had successful technology careers in South Africa — Bauer had sold his company, Fab Technologies, to then-JSE-listed Idion Group, while Neil Murray was part of the then-listed Global Technology.
The two left those businesses and moved to the UK independently of each other to pursue their career options. It was there, in 2002, that they met for the first time. With a common background, they soon started brainstorming new ideas, eventually coming up with what would be the underpinnings of Mimecast.
The company was founded officially in 2003 and, after two years of intense development, it released its first product.
Founded on the premise that cloud computing would take off in the years to come, which it has, Mimecast developed products to help companies better manage their e-mail systems — by making sure e-mail was always available, that it was archived, and that it was secure. At the time, e-mail was seen as a “best effort” service, but increasingly companies were using it in a mission-critical way.
The founders funded the early start-up business themselves, only later bringing in angel investors to help with development costs. They later secured venture capital — in three rounds, the first in 2006, the second in 2008 and the last in 2012.
The founders’ first big break was selling into law firms in London, which were “incredibly onerous in their requirements around compliance and security”, allowing Mimecast to build a “very comprehensive platform”, says Bekker. The legal profession remains a key industry for Mimecast, with the company counting 90 of the top 100 law firms in the UK as clients. It also boasts every large law firm in South Africa as a customer. Other industries, including insurance, have since become just as important for the company.
A big early break came when parastatal Transnet signed up as a client. “It transformed our business in South Africa. Today, they are our biggest customer in South Africa and one of our biggest worldwide, with 25 000 users making use of our full suite of services,” says Bekker.
In the early days of Mimecast, the South African and UK operations grew at a similar speed, and were a similar size, although the UK – and now the US – have become bigger revenue contributors.
The development team is based in the UK, although Bauer and chief financial officer Peter Campbell are now in the US.
The company first established its presence in the US in 2008, in Boston, which is now its head office. It has grown its US operations to rival the UK in terms of sales, with offices in Chicago, Dallas and San Francisco.
Mimecast has also opened an office in Australia, with plans to use it to service the broader Asia-Pacific region. Following the listing, it is considering expansion opportunities elsewhere, too, says Bekker.
He says Mimecast now intends using the Nasdaq listing to flex its muscles as a brand. “We intend to become a more mainstream brand,” he says. “We’ve largely flown under the radar until now.”
That Mimecast is not already more widely known is perhaps surprising given that it has more than 15 000 corporate clients around the world, with more than 4m active users of its products (more than 800 000 of those are in South Africa).
Bekker says Mimecast’s management team is proud of its South African heritage. “The business continues to have a very strong South African fabric,” he says. “Other than the Chicago and Dallas offices, there are South Africans in every office, and lots of them. Peter and Neil are very proud of their roots.”
- This piece was first published in the Sunday Times