Rally Software Acquired By CA Technologies for $480 Million

Congrats to my friends at Rally Software on the announcement that they’ve signed a definitive agreement to be acquired by CA Technologies for $480 million.

Part of the fun of having a blog for a long time is that it captures some of the history – in the moment – of what’s going on. For example, from a post in 2008 about Rally’s $16.85m financing, I riffed on the origins of the company.

Rally started out life as F4 Technologies.  I remember my friend Ryan Martens sitting down with me and Chris Wand around 2001 and walking us through his idea for changing the how he approached managing the software development process.  I can’t remember if Ryan used the word Agile at that time, but I remember scribbles on a white board that listed out all the different software that Ryan had used at BEA to manage his dev team and how maddening it was to try to integrate information in Word, Excel, Project, a dev workbench, a set of testing tools, and the support / QA system.  Ryan had a vision for an integration web-based system to layer on top of all of this to help support and manage the software development process.

We weren’t the first investor in Rally.  Ryan quickly raised about $400k of friends and family money.  We offered Ryan space to work out of our office which he did for a year or so as he got things up and running.  About a year after he got started, he was ready to raise a venture financing.  At the same time, his partner at his previous company – Tim Miller – was doing an entrepreneur-in-residence at a local Boulder VC firm (Boulder Ventures).  Ryan was encouraged to team up with Tim and shortly after that happened we co-led the first round VC financing with Boulder Ventures.

It has been a rocket ship from there.  Tim, Ryan, and team have created a phenomenal company that is built on two trends that have picked up massive speed in the past few years: (1) Agile and (2) SaaS.  In 2003 – while Agile was known – it was largely limited to ISVs and a few leading IT organizations.  SaaS was beginning to be talked about as Salesforce.com’s success (and leverage from the SaaS model) became apparent.

Or if you want to go back to 2004 and 2005 when I was really learning about Agile, well before it had become a household name, you could read my posts Agile Software Development with SCRUM or Do You Develop Software For A Living? – Get Agile with Rally Release 5.

Or maybe dip into the 2006 and 2007 time frame when Rally was in an award cycle with my posts Rally’s New Financing and the E&Y Entrepreneur of the Year Award and Boulder 2007 Esprit Entrepreneur Awards.

Over the fast dozen years, Rally has gone from a raw startup to a 500 person public company. Tim Miller (CEO) and Ryan Martens (CTO, founder) have been working together from the start of the journey. Jim Lejeal, the CFO, was an original angel investor, then board member, and then CFO joining full time when the company was around 200 people.

It makes me so happy to reflect on my relationship with each of Tim, Ryan, and Jim. I first met Tim when he had just started Avitek (his previous company) working in the same office space as Andrew Currie, who had just started Email Publishing (my first angel investment in Boulder.) I met Ryan via Young Entrepreneurs Organization – we were both in the same YEO forum. And I was the seed investor, via Mobius, in Jim’s second company (Raindance, which he co-founded with Paul Berberian – CEO of Orbotix and Todd Vernon – CEO of VictorOps.) But more importantly, I’m close friends with each of them, even though my direct involvement in Rally ended about two years ago when the company went public.

There are hundreds of paragraphs I could write about all of the amazing things Rally Software has done for the Boulder Startup Community and for the extended city of Boulder. But I’ll end with one of them – the creation of the Entrepreneurs Foundation of Colorado (now Pledge 1%). The story starts in 2007 with the founding of EFCO, which Ryan and I spearheaded and had a huge punch line in 2013 when Rally Made a Gift of $1.3 Million To The Boulder Community after their IPO. Ryan continues to head up EFCO and is co-founder of Pledge 1%, which is the effort to take EFCO international.

To the extended Rally Software family past and present – congratulations. You’ve built something very special that is part of the long arc story of Boulder. And – to Tim and Ryan – thank you for letting me participate in your journey.

  • mark gelband

    Congrats to all involved

  • Congrats to Rally Software!

    I know often we look at IPO as the final exit for a startup, yet many times companies can IPO and then still get acquired like Rally. It seems that often publicly traded companies are worth more as an acquisition target than the public markets will value.

    Does this ever challenge your strategy on selling your equity after IPO, or would any subsequent acquisition after IPO be such a small increase on the multiple you already received it’s not worth sitting on stock of a publicly traded company.

    Is your strategy on selling stock once a company goes public more around all the additional regulation and rules of switching from a private company to a public one?

  • I’m happy for all involved, great milestone!

  • Congrats, ringing the cash register is a cause for celebration. Means you built something of value and other people recognize it.

  • Dasher

    Congrats Brad! From here in SV, it is cool to see another entrepreneurial ecosystem taking shape in Boulder.

  • A monumental achievement for all involved.

  • What Tim and Ryan discovered is that nearly all QA software driving the world is mediocre ( still today ) and to pursue a higher calling ( pun intended ) you need something better , nuff said

  • Great story of giving and good karma coming back! Plus some great execution from the team.

  • bradbernthal

    +1 on congratulations to the Rally team. Two Rally legacies stand out to me. #1 – what Brad highlights below about EFCO and the pledge 1% movement. #2 – intentionality about how to run a company. Rally had a philosophy, built into its DNA from the start, about how to treat people, about the value of implementing better methods into software development, and about how to use many of those same improved methods as a management approach. I’ve always loved speaking to Rally employees – from the leadership and throughout the organization – because decision-making and methodology is always thoughtful. Not always right (although right a lot). But always, always thoughtful. I’ve learned a lot from Rally people. My prediction is that Rally is a company that, when we look back in 15 years, will have a family tree that leads to a lot of interesting activity in the Front Range.

  • Having gotten to know the Rally leadership over the past 2 years I can say they are a great group. Congrats to Ryan and Tim on a job well done!

  • I’m at CA, and hearing this story and reading the comments gives me a great sense that we’ve made a good decision with this acquisition. I hope the execution of the integration of the two companies continues the trajectory of Rally’s past.