It is a Friday, so Paul Lynch’s office in San Antonio, Texas is quieter than usual. It is the one day a week when most of his team work from home, so the Dubliner has time to take a video call to discuss how he has led the turnaround of Import.io, a web data integration company that was once valued at $1 billion (€920 million).
The business however fell into difficulty and went into administration in Britain before Scaleworks, a B2B software-as-a-service venture equity firm cofounded by Irishman Ed Byrne acquired it in January 2023. Lynch, a venture partner with Scaleworks, went in to turn around the company which simplifies and streamlines data collection from thousands of website feeds collecting more than half a trillion data points per month.
Just over a year later, a lot has happened. Import.io has been restructured and is now growing again. How this happened is a fascinating story that gives insights into what transpires at promising tech companies when they run out of cash, and how it is possible to rescue them.
Founded in London in 2012, Import.io was for years considered one of Europe’s hottest startups as it raised more than $46 million. In December 2019 it closed a $15.5 million series B round led by Talis Capital, best-known in Ireland for backing Mike Lynch’s Darktrace, prior to its successful £1.7 billion (€1.98 billion) IPO in 2021.
Import.io’s capital structure was packed with smart investors who could see the potential of extracting web data for enterprises. Gary Read, the then chief executive of the company, said Import.io empowered 800 companies to “make business-critical decisions based on the data we provide every day”. Matus Maar, the cofounder of Talis Capital, described the company as “game-changing.”
Import.io was at its peak valued in the hundreds of millions of dollars and tipped for even greater things as a $1 billion business. As the pandemic drove tech valuations skywards, Import.io was named by Inc magazine as the 739th fastest-growing private company in America. Over three years, Import.io had seen its revenues surge by 640 per cent putting it in the top 100 fastest-growing software companies in the United States. “I look forward to exciting times ahead,” Read predicted.
It was now time for a series C round to take Import.io to the rarefied world of being a tech unicorn. “It was raising at a billion-dollar valuation,” Lynch said. “But then a lot of things moved against it.”
Scaleworks was founded in 2015 by Ed Bryne and Lew Moorman, a former president of Rackspace Hosting. Byrne was a friend of Lynch from the mid-00s when they worked together in Hosting365, then the largest website hosting company in Ireland.
Lynch had stayed friends with Byrne as their careers later diverged, before in early 2016 Scaleworks acquired a company called Assembla. Byrne asked his friend to reenergise Assembla, and Lynch successfully turned around the company before selling it to Idera, a business chaired by Steve Young, a former quarterback for the San Francisco 49ers.
Next, Lynch went into another Scaleworks company called Chargify tasked with a similar goal of reigniting the business, which he did while concurrently running another portfolio company called Keen. Lynch merged these two companies before in 2021 combining this business with a non-portfolio company called SaaSOptics.
The owner of SaaSOptics, a venture capital firm invested $150 million into the merger, leading to another successful outcome for Scaleworks. Lynch was back to Scaleworks and started to look for the next company to get involved in. “Our investment criteria in Scaleworks is we don’t buy businesses that are hockey sticking through the sky. We’re grinders,” he explains. “We buy businesses that are typically five to eight years old, and three to nine million dollars in revenue.”
Scaleworks sticks to strict investment criteria when buying. “We’re not speculative. The vast majority of venture capitalism and private equity in the US have one thing in common: they don’t want to operate. They want to make an investment that allows a management team to drive growth. That’s the model. But we want to operate. We buy businesses and we grow them.”
Would Scaleworks look at buying Irish tech companies? “Of course,” Lynch said. “I would say over the last 18 months I’ve probably had up to 25 conversations with Irish founders. Not around buying their businesses but around helping them.” Irish startups have asked Scaleworks to take minority investments, but he said, this wasn’t its model.
“Our model is around full acquisition and then putting in an operational team to stabilise the business and drive growth. I would love to buy something in Ireland but as yet we’ve not found the right business.” Has Scaleworks looked at anything? “We did look at Altada. But it was a lot to untangle.”
Lynch said he knew Eoin Goulding, the buyer of Altada. “He’s a brilliant guy. His success story in the security business is very high. But for us, Altada was just too complex.” Instead, Scaleworks kept looking for new businesses to invest in, but in the wake of the pandemic, they could find few businesses that matched its criteria, as even mediocre businesses could achieve multiples of six to eight times revenue.
“So, we waited, and kept our powder dry,” Lynch said. “When the downturn started to happen, the type of businesses we invest in started appearing.” One of them was Import.io.
Undoubtedly, Import.io is valuable, as it scrapes data from websites and turns it into a format that allows its customers to make data driven decisions. It was facing competition, but Import.io had an impressive product so it was holding its own. But it had a single very big stock market listed customer that accounted for a large amount of its revenue. The customer had a bad trading quarter and decided to take the services offered to it by Import.io in-house.
“The timing was terrible, as they were in the middle of raising at a unicorn valuation. When that customer pulled out, it had an enormous impact on revenue. Suddenly, half its revenue walked out the door.” Just as this happened, tech valuations were collapsing as the pandemic ended. The market was no longer interested in investing in Import.io at anywhere close to the valuation it once commanded. Worse, Import.io was running out of cash. “Import.io effectively imploded,” Lynch said. “That implosion took six weeks. It was catastrophic.”
As its cash raced towards zero, Import.io looked at doing an emergency pre-pack administration in Britain, but to avoid failure it needed a new investor.
How did Scaleworks hear about it? “We didn’t find it, they found us. Right through this whole crazy era of free money, businesses were coming to Scaleworks and asking us to buy their declining crappy businesses that sell mangos on the back of donkey at a 20 times valuation,” Lynch recalled. “And we were saying no thank you.”
Import.io was a good business but Scaleworks balked at the asking price. “We said, okay, take it to the market, go everywhere else. We want to buy your business but take it to everybody else and if nobody else is interested, come back to us.” Import.io tried to find another buyer but couldn’t, so they came to Scaleworks. Talks in earnest now began. “The management team was strong,” Lynch said. “It’s a brilliant company, the technology is incredible.”
“It was very unfortunate where they found themselves,” Lynch said. “Ultimately they couldn’t find investment at the level they were at, so they had to tell their existing shareholders: ‘Let’s just land the plane.’ And that’s when we came in.”
Lynch and the team in Scaleworks were experienced, but he credits his external advisors, Nick O’Dwyer in Grant Thornton and Gerard Ryan in Eversheds, too with ensuring the acquisition went smoothly. “They were both brilliant,” Lynch said. “When you’re used to dealing with US bankruptcy advisors and lawyers, it’s just a breath of fresh air working with Ger and Nick.”
“Venture capital is about grow, grow, grow, firehose money at sales and marketing and everything else,” Lynch reflected. “Not many businesses actually do that. This was one that did it. They were very successful; they grew this business like crazy. But then they got hit by an economic outcome that they never, never could have foreseen. And they end up in trouble and they end up coming through a receivership process. I’m on the other side like the Grim Reaper, but I’m actually there because we can see the potential of this business.”
When Scaleworks took over Import.io, it knew it had to move fast. It had a great customer and product but it needed to reduce cash burn and get ready for growing again. Import.io at its peak employed 260 people, but it had already done several redundancy rounds before going into administration. “We took on about 120 people,” Lynch said. “A large amount of that was in India, which we have since moved to Poland.”
Import.io’s chief executive Read left the business along with a number of other senior management. “Gary Read is a brilliant guy, but he wanted out,” Lynch said. “We didn’t keep many of the senior management team. We kept the mid-level managers, and we promoted people.”
Three of four of the key senior roles in Import.io are occupied by new people who are all former senior executives in Mailgun, a provider of email infrastructure software. Scaleworks was an early investor in Mailgun before selling it in 2019 to Thoma Bravo, a private equity firm best known in Ireland for buying Glofox in 2022. David Dobbins (CTO), Chris Block (VP of Sales), and Alison Turner (VP of Marketing) all came out of Mailgun, so it is a team Scaleworks knows. Lynch also knew the business not just through Scaleworks but also because Chargify managed its billings.
To stabilise the business, Scaleworks did a multimillion-dollar recapitalisation. “When you’re buying into a large growing business, it takes millions to restructure it and get it back to growth.” Closing India, and moving its headquarters to San Antonio, Texas delivered more savings, and ensured Scaleworks had access to a team of people it knew and trusted. “We always do that,” Lynch said. “Most of my management team is 20 feet from me, or they would usually be. It’s a Friday so most of them are working from home.”
Scaleworks has worked in Poland since 2006 so it made sense to go there too, instead of India. “The engineering staff are incredible in Poland,” Lynch said. “We moved part of the business there immediately and we saved a significant amount of cash and increased our productivity. Plus I like Poland. It is a Ryanair flight from Dublin. So I can drop in and see my Mum at home, and then fly on to Poland.”
Today, Import.io is growing again. “From the day we bought it, we’ve grown this business,” Lynch said. Often, Scaleworks buys a business from a product-led founder, who can’t achieve sales, but Import.io was different.
“This business was a little bit different in that it was growing hugely fast, but growing around one customer and when that customer left, then the growth started to stagnate,” Lynch said. Import.io today has a diverse number of customers with only one customer accounting for much more than five per cent of sales. “We’re below $10 million in terms of revenue. We were above that before with that larger customer,” Lynch said. “The business is now growing at about 35 per cent to 40 per cent year-on-year.”
Import.io’s clients include Volvo, Unilever, Dow Jones, and the Ritz Carlton so it has blue-chip reliable revenue. Not being too exposed to any one customer or sector, is all-part of the Scaleworks playbook. “It’s way too dangerous to be otherwise,” Lynch said. “The risk is way too high.”
Today Import.io employs only 60 people directly. Lynch expects its revenue to go over $10 million by mid-2025. He said its employee numbers will top 100 by the end of 2025. “Bringing more people into a business is never a target, as it is a cost,” he said. Lynch said big brands are now selling more from their own websites directly to consumers, cutting out stores and other middlemen.
“That’s a huge shift,” he said. “Big brands are going online directly to the consumer so margins are increasing, and brands can bring unit costs down. We’re dealing with the guys doing that.” This made Import.io more valuable, as brands are becoming retailers, rather than just manufacturers and distributors. “We’re selling directly to brands and we’re winning.”
“The whole concept of data being the new oil is true,” Lynch reflected. Import.io was making money by collecting things like the prices of all products on one big grocery retailer’s website, and then selling it to a competitor. It could do similar for hotel groups, interested in knowing what their rivals were doing or what deals accommodation aggregators were offering near them.
“Anywhere there’s web-facing data where decisions need to be made, we go and get it,” Lynch said. “It could be groceries, retail, ecommerce, short-term letting.”
The firm also worked with governments interested in tracking activity in hostile countries, or it could in countries like the United States, that do not have onerous European GDPR rules, collect data that could be used by companies when doing due diligence on new hires such as checking if they had any convictions for things like drug-impaired-driving.
“There are a lot of use cases,” Lynch said. “We work with certain legal firms for example who are suing people who are selling knock-off luxury brands. People can build court cases around data.”
“The big lie is that venture capital tells everyone is that it’s all about growth. It’s not. It’s not necessarily about making money either, but it is about showing the potential to make money.” Lynch said having a path to profitability was a must. “At a certain point in time you have to be able to make money,” he said. “Growth is a key determinant of what you can sell a business for but so is your gross margin,” he said. “If for example, you have a gross margin in the 80s, then you probably sell for a revenue multiple as opposed to a profit multiple at exit.”
Another determinant of valuation he said was whether it was in a category with the wind behind it. “Data is growing exponentially,” he said. “If you want an analogy in terms of Import.io, we provide the crude oil. With it, you can refine it and make gasoline or make it into petroleum jelly like Vaseline or whatever. But without crude oil, you’ve got nothing. That’s what we give you, and in a format you can use.”
Scaleworks is ambitious for Import.io. It has restructured the company and got it back to growing again with an experienced leadership team. “The plan is to grow for the next couple of years,” Lynch said. And then sell? “It’s a horrible market to sell companies,” he replied. “We’ll continue trading through it. Eventually, we will see interest rates coming down in the Eurozone and the US. When that happens we’ll see decent transactional activity in the market again.”
Reflecting this market, between 2023 and 2024, Scaleworks bought six businesses and sold none. “It’s a buyer’s market. There’s a lot of great technology companies out there that raised venture capital, but when they go back to their investors they can’t raise again.”
Scaleworks is ambitious for companies it invests in, but not sentimental. “I always say to the teams and companies coming in to work with me in Scaleworks that we’re not growing old together. We’re not going to be in our 70s sitting on a porch whittling wood together. We buy businesses. We grow them, and then we exit. That’s our model, but we’re not quick flips either.”
Scaleworks had a successful exit with Chargify. How does that business compare with Import.io? “I think the potential for Import.io is higher because Chargify in many ways was quite late to the market. There were already established players in the market and market leaders.”
“I think with data we’re still almost in its infancy. Everybody needs data to make decisions. The potential for this business is infinite because the requirement in terms of what it delivers is so important at every level.”
