Agilence Hit $35M After Two Pivots. Its CEO Says the Sale That Followed Was a Mistake
Russ Hawkins spent thirteen years turning servers-in-every-store into $35 million of retail analytics. Then a family office with a short fund life forced the sale.
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Russ Hawkins sold Agilence in 2021 and says on the record that he should not have.
It wasn’t the right time to sell. I don’t think we should have sold, to be honest with you. We sold the company short. We sold sub five, and I think we should have gotten more like eight.
Russ Hawkins, CEO, Agilence
The thesis. Agilence spent thirteen years converting a hardware business into a $35 million data analytics company, financed almost entirely on discipline — $30 million of equity, never more than $5 million of debt at a time. What ended it was not the operating plan. It was one investor on the cap table whose fund needed an exit.
What the company used to be
Agilence was founded in 2006 in loss prevention, and its original product was video. Grocers would print a list of suspect transactions from their point-of-sale system and turn to Agilence to visually verify them — an analyst at headquarters reviewing footage across a chain of stores.
The delivery model is the part that matters.
The value was in the software, but it was delivered in a piece of hardware. We put servers out at each grocery store, essentially.
Hawkins was recruited in 2008 by a venture capitalist he had got to know after selling his previous company. He looked at three portfolio companies and picked this one: “it was a great technology with poor go-to-market and poor marketing.” He is not a founder and does not pretend to be — he describes himself as a serial startup guy who comes in as the first outside manager alongside the original founder, and Agilence is his third.
The 2013 pivot, and what it turned into
Between 2008 and 2013 he converted the business to recurring revenue. In 2013 he made the real change: away from video, toward data analytics, competing against a technology called exception-based reporting that large retailers were already using.
Ten years later the use case has drifted a long way from where it started.
Originally the use cases were all around loss prevention, but now 80% of my customers use it for operational analytics, merchandising, marketing — even the finance organisations use it for a variety of things. Today it’s all about data management and making the data exhaust that all the systems in these businesses produce — we pull them all together and give the users the ability to create value out of it.
Growth was 17.3% over the prior year, which puts the company around $31 million a year earlier. Three customers are close to $1 million a year and Hawkins expects all three over that threshold within the year — a metric he says he looks for first when he reads an S-1: “go down to the customer section, around page 60, and see how many million-dollar-plus customers they have.” The GetLatka profile records the $35M figure for the date of the conversation.
Seventy people, five of them carrying a bag
The team is 70, with 27 or 28 engineers. The sales organisation is about ten, of whom five carry a quota; the rest are BDRs and technical leads doing solution architecture. A fully ramped AE’s quota is around $1 million of ARR.
Territories split by use case rather than geography, because the product looks different depending on what the customer sells.
Quick service and table service behave differently enough to be separate segments.
Grocery, specialty and drug stores, with convenience stores becoming a fourth.
Accounts are assigned, with the account executives spending their time on the largest names while marketing works to get mid-market buyers to self-identify. US and Canada only — Hawkins has taken a company international before and says it takes energy and patience he would rather buy than spend.
Debt as a standing habit
Agilence raised just under $30 million of equity over fifteen years, and Hawkins peppered debt in alongside it, paying it down out of cash flow. At its height, about $5 million.
I’ve always been very conservative. I don’t like to get ahead of my skis in terms of hiring, even though I am chasing growth. I never want to be in a desperate situation where I have to raise money because I have to. So we’ve tried to take a very methodical approach over time, raising money really before we need it.
He is unusually specific about how the debt terms moved as the business matured.
- Early on Low-teens interest, with one to three percent warrants attached. AKKR did one of its first debt deals with them.
- As revenue got predictable Better rates, and a bank — PNC — taking the lead position with riskier providers subordinated beneath it.
- Under private equity Leveraged up deliberately: an equity-to-debt ratio around 60:40. “That’s kind of part of the PE playbook.”
A lot of founders don’t even know that debt is an option.
The investor who forced it
Agilence was acquired by Cuadrilla Capital in 2021. Hawkins is clear that the decision was not his, and clear about why it happened.
The investors and the owners of the business decided that they wanted to do it for their own reasons, which is a problem — it’s a problem from my perspective with multiple venture investors that have conflicting objectives within their own funds.
He splits the cap table into the patient and the impatient. NextStage, the original investor who hired him in 2008, was supportive throughout, as was Granite, which he brought in later. The pressure came from a family office with a short fund life.
Asked why he did not surface the risk in that firm’s structure before taking the money, he does not deflect.
Well, I guess I just blew it. I misinterpreted what they were at the time, and they told a good story about what their hold period was and what they wanted to do. Maybe they just grew tired of it. All I know is that they forced our hand, and it was not what we wanted to do.
What the new owner unlocked
The thing Hawkins wanted and could not have as a venture-backed company is acquisitions, and Cuadrilla’s arrival made them possible. He was looking at a couple at the time of the conversation, and the list of what he wants is a map of the product gaps.
- Incident management and task management — his stated first interest.
- Frontline human capital management — for retail environments specifically.
- Real-time rather than forensic — “we basically can tell you what happened up until yesterday.”
- Supply chain and distribution management — where they already have some use cases.
- Geography — buying a competitor for a foothold, because building it greenfield “is just expensive and takes a long time.”
The division of labour with the owner is the cleanest description of PE-backed M&A on any of these tapes.
I come up with the strategic ideas and run the company, and they work the details on the financing.
Agilence was Cuadrilla’s first investment, which Latka raises as a concentration risk. Hawkins is unbothered: “they’re transparent, they tell me what they want, we talk about it, and then I execute on it. They’re essentially investing in my vision of where I want to go.”
The ladder underneath all of it
The old platform hit $1 million around 2009. Hawkins stopped selling it the moment he made the 2013 pivot, and the new platform reached its own first million-dollar year in 2014. It passed $10 million around 2018, and $35 million by 2023.
Fifteen years, three product generations, one CEO who was not the founder, and a sale he did not want. Asked what he wishes he had known at twenty, he compresses all of it into a sentence.
How important the decisions that you’re making every day are.
Sources Russ Hawkins’s interview with Nathan Latka, recorded 8 August 2023; revenue, headcount and funding rows from the GetLatka Agilence profile; the Cuadrilla Capital acquisition as announced by the firm in October 2021.
