ZEDEDA, a specialist in edge management and orchestration, is considering acquisitions to accelerate its growth, founder and CEO Said Ouissal said.

The San Jose, California-based company would like to acquire players in artificial intelligence or with smart solutions in hardware or security, he said. It is interested in targets with customers, some revenue and small teams of up to 20 people, he said, adding that it will consider targets globally.

Deals must help accelerate ZEDEDA’s growth, especially in the segment of artificial intelligence to fulfil customer demand, he said.

ZEDEDA has not made any acquisitions to date, but Ouissal said this is a good time to consider the option. The company is well financed, having raised a USD 72m Series C earlier this month, and there are many opportunities in the market, he said.

The company seeks candidates directly, but, especially at the moment, it is also receiving significant inbound interest from bankers and from its network, he said.

Ouissal said the company has looked at acquisition candidates in recent months but has not closed any deal. ZEDEDA is not under pressure to buy and analyzes candidates very carefully, he added.

He did not comment on current talks or on the timing of a potential first deal.

If it finds the right candidate, ZEDEDA will consider acquiring a majority as well as a minority stake, possibly in connection with a partnership, the CEO said. He explained that the company’s management has experience in M&A transactions from previous roles in larger companies and looks at different scenarios.

Ouissal did not disclose the budget for acquisitions but said that to finance potential deals the company will consider cash, equity, and debt.

ZEDEDA revenues are in the multi-digit millions of dollars range, he said, adding that it is growing at a year-on-year pace of 250%. Immediately after the announcement of the Series C, the company has seen an increased interest from customers who seem to be more confident now that ZEDEDA is no longer considered a small start-up, he added.

IPO and financing plans

ZEDEDA has the potential to grow and go public, but not yet, Ouissal said. The company expects to start taking concrete steps for an IPO at the end of next year, he added.

The business has a score of 27 out of 100, according to Mergermarket’s Likely VC Exit predictive algorithm. Mergermarket’s Likely VC Exit predictive analytics assign a score to VC-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.

In an interview with this news service in October 2023, Ouissal had said that a public listing makes sense for companies with annual recurring revenue of at least USD 100m. He has also mentioned that VMware [NYSE:VMW] and Nutanix [NASDAQ:NTNX] are among the listed companies that could be compared to ZEDEDA.

ZEDEDA plans to be profitable in about two years’ time, the CEO said. He added that a financing round before the IPO does not seem necessary at this point but remains an option that will be considered.

Since being founded in 2016, the company has raised USD 127m. A report from Bloomberg reported a valuation of USD 400m for the USD 72m Series C. Ouissal did not comment on that report.

ZEDEDA’s software allows companies to deploy applications at the edge, connecting the edge nodes to the cloud or a corporate data center. The software is powered by artificial intelligence and Internet of Things technology that gives organizations control and visibility of edge data.

ZEDEDA has 100 employees across its locations in the US, Germany and India. It is considering opening new locations for R&D and more sales offices, Ouissal said. It will also hire mainly in marketing and sales, he added. Approximately 50% of ZEDEDA’s revenues are generated outside the US, he said.

The Series C was led by Smith Point Capital, founded by former Salesforce Co-CEO Keith Block. Ouissal said Smith Point Capital has expertise in enterprise and software as a service (Saas)  and an extensive network to support ZEDEDA.

Other investors include Hillman Company, LDV Partners, Endeavor Catalyst Fund and Forward Investments (DEWA), Lux Capital, Almaz Capital, Coast Range Capital, Juniper Networks, Emerson Ventures, Chevron Technology Ventures, 5G Open Innovation Lab, Rockwell Automation and Porsche Ventures.

The company receives legal advice from Paul Hastings.