SilkRoad Paving the Way to an IPO

By Staff Report

Feb. 26, 2008

Flush with a fresh $10 million capital infusion, SilkRoad Technology is laying the groundwork for an initial public offering while improving its product line and expanding its markets.

“We have big plans for the company in the not-so-distant future,” said Andrew Filipowski, SilkRoad’s chairman and CEO.SilkRoad, a provider of Web-based talent management software, has raised about $33 million in total seed money.

Filipowski said he expects to grow the company’s sales team from 60 to 75 within the next two months. The new hires will primarily focus on strengthening SilkRoad’s presence in the West—California, Washington state, Denver and New Mexico are on the radar screen.

The company is also eyeing international markets, such as Brazil, Argentina and Singapore. SilkRoad is already active in several European markets, including England and Germany, but wants to expand its international footprint because it believes the demand for talent management tools is on the rise overseas.

Product development is also an important goal for SilkRoad, which is best known for its onboarding platform, RedCarpet.

Filipowski said there are plans to enhance existing software lines as well as to introduce new products. He declined to provide specifics, but said the company is taking a look at software that addresses important HR issues, such as affirmative action and litigation support.

SilkRoad’s new product development projects—and international expansion efforts—are part of a broader strategic plan to go public in about a year, Filipowski said.

The company’s bid could have a big payoff, according to Jason Corsello, vice president at HR technology consulting firm Knowledge Infusion.

SilkRoad is in the popular talent management “software as a service” arena, Corsello said. This means that clients can access software by using an Internet account, rather than by buying a disk to download the program, he says.

“Wall Street is really keen on these types of vendors,” Corsello notes. Other companies that use this model include well-known HR brands Taleo, Kenexa and SuccessFactors.

Consolidation is also on Filipowski’s mind—though he is uncertain of where the company may end up.

“I cannot tell you whether SilkRoad will be the one doing the acquiring or the one who gets acquired,” he said. “What I can say is that the industry will not be this fragmented for too much longer.”

When the dust settles, only a handful of large providers will remain, noted Lisa Rowan, an analyst with research firm IDC. She said there is no way to predict which companies will be the ones left standing.

Case in point: Workstream, a public company with a significant market presence. These characteristics should have made it an unlikely takeover candidate. Workstream recently raised many eyebrows when it announced a merger with the operating holding company of Empagio, which owns payroll application Tesseract.

“There is no telling what will happen,” Rowan said. “It is going to be interesting to watch.”

—Gina Ruiz

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