Exton software maker growing, hiring, despite US slowdown
iPipeline sales, profits up; owners say buyers are scarce
Two years after NewSpring Capital of Radnor, Fidelity Ventures of Boston and its own managers pumped $18 million into iPipeline, the Exton insurance-software maker says sales have jumped sixfold, to more than $30 million, and employment has more than tripled, to 170, says chairman (and NewSpring general partner) Michael A. DiPiano.
Plus, "we continue to hire," says marketing chief Mike Persiano: "software developers, marketing and sales."
The firm is "profitable, and generating free cash flow," according to DiPiano. "It's inexpensive. It's sort of like a Mac, you open it up, you can use it right away. They sell to both 300 or 400 (insurance) carriers and 1200 general agents. They can use the same system along with the end customer... They're not taking this business from the SAPs of the world. They're taking it away from paper and faxes, which is what most people are still using at this late date to fill out an insurance application."
iPipeline has been "delivering many new tools" that "fit our markets nearly perfectly," says Michael P. Hydanus, chief administrative officer at National Western Life Insurance Co., Fort Worth. Other customers inlcude John Hancock, Mutual of Omaha, Met Life.
DiPiano and his fellow investors dominate the iPipleine board alongside cofounder Cary W. Toner (CLU, ChFC, former owner of the nationwide Toner Organization brokerage). Cofounder Bill Atlee (an ex-Fidelity Mutual Life agent and Direct Quote America Inc. founder) remains a senior executive (not a board member). DiPiano helped install chief executive Tim Wallace (formerly of MEDecision, FullTilt Solutison and XeroxConnect) and other local investor-operators on iPipeline's management team.
DiPiano projects next year's sales at $48 million to $55 million. Time to sell? "They could launch now," DiPiano told me, "but the market's still not great. There's not a lot of IPOs. The debt markets are still very difficult; banks are under these government Memorandums of Understanding, and they can't lend to a lot of their own customers. So there's not a lot of M&A. Not a lot of exits. So we're getting cash from some companies through dividends." The old-fashioned way? "I prefer the not-so-old fashioned way!"