Reductive Labs, Moving to Portland, Raises $2M for Open Source IT Automation

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Digg, Barclays Capital, Oracle, Sun Microsystems, Red Hat, Harvard Law School, Stanford University, and the New York Stock Exchange, to name a few.

So why take venture capital now? “There’s a chance to grow that we can’t take advantage of if we do it organically,” Shafer says. “We want to leverage the work up to this point.” That means growing the team, which so far consists of the three founders, plus a dozen people working in various capacities. Roughly 50 people have contributed code to the project. “We will invest some in marketing, but the majority [of the funding] is to ramp up development and provide more value to the ecosystem,” he says.

As for the company’s fundraising exploits, Shafer says, “We’re an anomalous experience. We had some interest from VCs a year ago. We had these conversations, and we saw term sheets, but we didn’t like them. Nobody knew how to value what we were doing.” So the team focused on their product and customers. When it was time to look for capital again, Shafer says, “We didn’t go on the circuit. We didn’t do 30 meetings on Sand Hill Road. Through a mutual ally, we talked to True. We liked them, we liked their background.” The deal moved quickly, taking just a couple of months to finalize.

Reached by e-mail, True Ventures co-founder Phil Black writes, “Puppet is the fastest growing open source project that addresses the [system administrator] market and solves the pain associated with managing these networks of computers and devices.” But is it a true game-changer? “Puppet has the same ability to disrupt its market like WordPress has done for Content Management Systems or like RedHat did for Linux,” he replies. Asked about his firm’s recent investments in the Northwest, Black says, “The Pacific NW region is strong and getting better each year. This investment will be our third new investment in the Pacific NW in the past 10 months (versus none the prior three years).”

Shafer thinks the sky’s the limit for growing companies in all regions of the country. “None of us are in Silicon Valley, but we got funding from Silicon Valley,” he says. “You’re going to see less and less concentration. There’s opportunity for people with good ideas and demonstrated ability to execute, to build relationships, and get an influx of capital you couldn’t even think about 10 years ago.”

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Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] Follow @gthuang

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