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Foundry’s Post-Acquisition Mission - Up to the Hilt

For co-founder and chief scientist Simon Robinson, Roper Technologies’ company purchase better enables the patient, long-term management perspective needed to successfully innovate and support a rapidly changing digital content creation industry.

With the $544 million acquisition by Roper Technologies this past March now complete, leading CG content creation software developer Foundry enters the next phase in its evolution as one of the leading providers of digital tools for the design, media and entertainment industries. With a software product roster that includes leading compositing software tool, Nuke, as well as Athera, a cloud-based end-to-end virtual VFX production pipeline solution, Foundry seems uniquely positioned to continue charting a course of sustained growth, in its customer base, revenue streams and profitability, for the foreseeable future.

The company has weathered, and prospered from, a series of strategic investments that started with the 2007 purchase by Digital Domain for $9.8 million. That stake was bought out by UK-based venture capital firm Advent Venture Partners for $12 million in 2009. The company was sold once again in 2011 to private equity firm The Carlyle Group for a reported $120 million, a 10x return for Advent. In 2015, Carlyle sold Foundry to HG Capital for $312 million; they in turn sold to Roper in a deal just finalized earlier this year. Papers filed as part of each successive transaction document Foundry’s consistent revenue growth over that 10-year period, a period marked by incredible changes within various digital content creation industries the company services.

For co-founder and chief scientist Simon Robinson, the Roper deal means business as usual, but with the added stability a long-term strategic investor, rather than an equity or VC fund, can bring to a management team’s peace of mind. “We've had a sequence of major investors over the last 15 years,” Robinson shares. “Each of them has been very helpful at bringing in expertise that expanded our business. You tend to grow a business and at some point, feel you’ve attained a level of maturity where you can say, ‘Well we know everything now.’ I always go through that phase… but then I'm always impressed by new advisors and investors that say, ‘Have you thought about these things?’ And you scratch your head and think, ‘Wow, don't even know what you're talking about.’ Then you become wiser again and go through that cycle again. You think, ‘Well, now we do know everything, clearly.’ That process never quite changes.”

“HG Capital was fantastic at getting us up to that next level of maturity,” he continues. “The thing about private equity investors is that at some point, they like to sell all their shares to someone new. Ultimately the job falls to us to go out and to find new investors. The exciting thing about Roper is they're not in the business of needing to redeem their majority shareholding at some later time. So, in five, six or seven years from now, we're not going to be looking at another cycle of trying to find new investors. That level of permanence puts us in a position to do lots of long term thinking in a way I didn’t appreciate before. It’s quite liberating for us as a management team. The company is the same today as it was six months ago. The people running it are the same… the decisions we have to make are the same… the products are the same. But we can employ the patience we hope will help us learn some new stuff along the way.”

In surveying the digital content creation technology industry, Robinson notes that one thing seems certain: uncertainty. “I'd love to be able to say to our customers, ‘In three years, this will happen, and you will have it on your desk.’ But our industry doesn't quite work that way. Things are always uncertain. So, we divide our effort between short term, ‘got to do it this year’ pieces of work, the regular cadence of maintenance, upgrades, feature and performance improvement, stuff like that, and running projects which are longer term in scope. On a two, three, five-year kind of scale. A lot of those are based on trends where we say, ‘Well, if that will be true in five or ten years, what will we be missing?’ And we speculate early on what some of those technologies might be.”

Which is where digital content production realities and customers’ shifting needs means ongoing market uncertainty. While we all know trend assessment isn’t a perfect science, technology research and development, which necessitates years of carefully planned, costly engineering and a great big crystal ball, is extremely unpredictable. “Future product arrival is never as certain as the yearly product enhancement cycle,” Robinson states. “When you try and predict a future trend, and work towards it, that trend will always move from where you left it. And your development effort in that direction won't always function the way you want it to either.”