Meet the founder who built and sold a $600M enterprise software startup from Sri Lanka
Sanjiva Weerawarana is a Sri Lankan success story. He founded enterprise software firm WSO2 in 2005, got it close to $100 million in ARR as its CEO, then sold it to private equity firm EQT for $600 million in May.
He sometimes drives for Uber, too.
Sri Lanka isn’t renowned for its startup ecosystem, but one company has been something of an outlier in the South Asian island nation these past two decades. An open source enterprise software provider with customers such as Samsung, Axa, and AT&T, WSO2 recently agreed to be acquired by private equity giant EQT, at a valuation TechCrunch reported at the time to be north of $600 million. (We can now confirm that the valuation was in fact exactly $600 million.)
The transaction, which remains subject to regulatory approvals, means that EQT will become WSO2’s sole owner, procuring all outstanding shares including those of WSO2’s investors and current and ex-WSO2 employees.
This liquidity event could also create significant wealth among those inclined to start their own ventures, given that 30% of the proceeds will be going to those employees.
“This shows that equity is important — one of the things that we have insisted on from day one is that every employee has been a shareholder,” Weerawarana told TechCrunch in an interview. “That’s very important, and it’s a concept that has not been understood here before, because there haven’t been companies that exited and gave any amount of meaningful financial return. Seeing is believing, right? Talk is cheap.”
Thriving through war and unrest
Founded out of the Sri Lankan capital, Colombo, in 2005, WSO2 is a middleware stack constituting tools such as API management, similar to Apigee which Google acquired for $625 million; and identity and access management (IAM), along the lines of $15 billion publicly traded Okta.
The main driving force behind this has been Weerawarana, a computer scientist and key figure in the open source community over the past 25 years, both as a member of the Apache Software Foundation and more recently as the creator of Ballerina, a cloud-native general purpose programming language for integrating distributed systems.
Prior to WSO2, Weerawarana worked within IBM’s research and development team in the U.S., where he helped develop web service specifications such as WSDL and BPEL. And it was there that the seed for WSO2 was sown.
“I actually tried inside IBM to build a new kind of middleware stack, but IBM wasn’t interested,” Weerawarana said. “So the only option was either start a company, or give up on the idea.”
Weerawarana spawned WSO2 in August 2005 alongside two co-founders: Davanum Srinivas, who left after two years; and Weerawarana’s former IBM colleague Paul Fremantle, who would go on to serve as CTO until stepping down in 2015 (he later rejoined and then left again, but remains an advisor today).
Notably, WSO2’s center of gravity has remained in Sri Lanka, despite a longstanding civil war and external pressure to relocate to the U.S., where Weerawarana had lived previously for 16 years.
“I came back [to Sri Lanka] in 2001, and two weeks before I landed in Colombo, the airport was attacked by a terrorist group — there were still pieces of planes on the ground,” he said. “In 2005, the war was still going on. Sri Lanka as a country has not been able to maintain a consistent calm environment for us, but that’s okay.”
Today, 80% of WSO2’s 780 employees are in Sri Lanka, with the remainder spread across a smattering of hubs in the U.S., Europe, and Asia.
“I wanted to show we could build a product-oriented tech company from Sri Lanka,” Weerawarana continued. “There had never been a company like this, and at that time there wasn’t even a company out of India like this. Indian companies were very services-oriented, as were Sri Lankan companies. But one of the big prices [for staying in Sri Lanka] was that at pretty much every funding round, the majority of investors would ask when I was moving back [to the U.S.]. And my answer was always the same: ‘I’m not moving back.’”
Investors weren’t the only ones who pressured WSO2 to move: Customers and competitors have also used its location against it at various junctures.
“Some of our competitors fought against us, saying, ‘Do you know where they are located?,’ and that becomes a challenge,” Weerawarana said. “Then we’ve had customers saying, ‘You’re located way over there, why are you charging us these prices?’”
On the flip side, WSO2’s geographic setting gave it the pick of technical talent, owning mostly to the fact that it was a product-based business in a sea of services.
“We’ve never had a problem with engineering and technical talent. We’ve been able to hire the best people in Sri Lanka for the last 19 years,” Weerawarana said. “If you are a creative engineer, would you rather work for a services company, or be in a role where you could be creative and work on top-of-the-line technology?”
Intel inside
After WSO2 raised a small round of angel funding in 2005, Intel’s VC arm emerged as its earliest backer, investing in 2006 and through several follow-on rounds in subsequent years.
Intel Capital’s initial $2 million cash injection was critical to WSO2’s early growth, and was the result of fortuitous timing. Pradeep Tagare was a senior investment manager at Intel Capital at that time and met Weerawarana through their associations with the Apache Software Foundation. Tagare was looking to invest in an open source startup to complement a duo of other open source investments it had made — one into Java-centric application server company JBoss (which Red Hat later acquired for $350 million), and another into database company MySQL (which Sun later snapped up for $1 billion).
“We were looking at a bunch of open source investments as a strategic initiative for Intel, essentially to build an alternate stack on Intel hardware,” Tagare explained to TechCrunch. “We had invested in JBoss, and we invested in MySQL. So we were now looking for an open source middleware company, and WSO2 fit the bill exactly.”
Sanjiva Weerawarana is a Sri Lankan success story. He founded enterprise software firm WSO2 in 2005, got it close to $100 million in ARR as its CEO, then sold it to private equity firm EQT for $600 million in May.
He sometimes drives for Uber, too.
Sri Lanka isn’t renowned for its startup ecosystem, but one company has been something of an outlier in the South Asian island nation these past two decades. An open source enterprise software provider with customers such as Samsung, Axa, and AT&T, WSO2 recently agreed to be acquired by private equity giant EQT, at a valuation TechCrunch reported at the time to be north of $600 million. (We can now confirm that the valuation was in fact exactly $600 million.)
The transaction, which remains subject to regulatory approvals, means that EQT will become WSO2’s sole owner, procuring all outstanding shares including those of WSO2’s investors and current and ex-WSO2 employees.
This liquidity event could also create significant wealth among those inclined to start their own ventures, given that 30% of the proceeds will be going to those employees.
“This shows that equity is important — one of the things that we have insisted on from day one is that every employee has been a shareholder,” Weerawarana told TechCrunch in an interview. “That’s very important, and it’s a concept that has not been understood here before, because there haven’t been companies that exited and gave any amount of meaningful financial return. Seeing is believing, right? Talk is cheap.”
Thriving through war and unrest
Founded out of the Sri Lankan capital, Colombo, in 2005, WSO2 is a middleware stack constituting tools such as API management, similar to Apigee which Google acquired for $625 million; and identity and access management (IAM), along the lines of $15 billion publicly traded Okta.
The main driving force behind this has been Weerawarana, a computer scientist and key figure in the open source community over the past 25 years, both as a member of the Apache Software Foundation and more recently as the creator of Ballerina, a cloud-native general purpose programming language for integrating distributed systems.
Prior to WSO2, Weerawarana worked within IBM’s research and development team in the U.S., where he helped develop web service specifications such as WSDL and BPEL. And it was there that the seed for WSO2 was sown.
“I actually tried inside IBM to build a new kind of middleware stack, but IBM wasn’t interested,” Weerawarana said. “So the only option was either start a company, or give up on the idea.”
Weerawarana spawned WSO2 in August 2005 alongside two co-founders: Davanum Srinivas, who left after two years; and Weerawarana’s former IBM colleague Paul Fremantle, who would go on to serve as CTO until stepping down in 2015 (he later rejoined and then left again, but remains an advisor today).
Notably, WSO2’s center of gravity has remained in Sri Lanka, despite a longstanding civil war and external pressure to relocate to the U.S., where Weerawarana had lived previously for 16 years.
“I came back [to Sri Lanka] in 2001, and two weeks before I landed in Colombo, the airport was attacked by a terrorist group — there were still pieces of planes on the ground,” he said. “In 2005, the war was still going on. Sri Lanka as a country has not been able to maintain a consistent calm environment for us, but that’s okay.”
Today, 80% of WSO2’s 780 employees are in Sri Lanka, with the remainder spread across a smattering of hubs in the U.S., Europe, and Asia.
“I wanted to show we could build a product-oriented tech company from Sri Lanka,” Weerawarana continued. “There had never been a company like this, and at that time there wasn’t even a company out of India like this. Indian companies were very services-oriented, as were Sri Lankan companies. But one of the big prices [for staying in Sri Lanka] was that at pretty much every funding round, the majority of investors would ask when I was moving back [to the U.S.]. And my answer was always the same: ‘I’m not moving back.’”
Investors weren’t the only ones who pressured WSO2 to move: Customers and competitors have also used its location against it at various junctures.
“Some of our competitors fought against us, saying, ‘Do you know where they are located?,’ and that becomes a challenge,” Weerawarana said. “Then we’ve had customers saying, ‘You’re located way over there, why are you charging us these prices?’”
On the flip side, WSO2’s geographic setting gave it the pick of technical talent, owning mostly to the fact that it was a product-based business in a sea of services.
“We’ve never had a problem with engineering and technical talent. We’ve been able to hire the best people in Sri Lanka for the last 19 years,” Weerawarana said. “If you are a creative engineer, would you rather work for a services company, or be in a role where you could be creative and work on top-of-the-line technology?”
Intel inside
After WSO2 raised a small round of angel funding in 2005, Intel’s VC arm emerged as its earliest backer, investing in 2006 and through several follow-on rounds in subsequent years.
Intel Capital’s initial $2 million cash injection was critical to WSO2’s early growth, and was the result of fortuitous timing. Pradeep Tagare was a senior investment manager at Intel Capital at that time and met Weerawarana through their associations with the Apache Software Foundation. Tagare was looking to invest in an open source startup to complement a duo of other open source investments it had made — one into Java-centric application server company JBoss (which Red Hat later acquired for $350 million), and another into database company MySQL (which Sun later snapped up for $1 billion).
“We were looking at a bunch of open source investments as a strategic initiative for Intel, essentially to build an alternate stack on Intel hardware,” Tagare explained to TechCrunch. “We had invested in JBoss, and we invested in MySQL. So we were now looking for an open source middleware company, and WSO2 fit the bill exactly.”
