March 27, 2023

A Sioux Falls startup helping address a need for software companies has raised $8.9 million in Series A funding.

Prismatic is an integration platform for B2B software companies that’s led by Michael Zuercher, who founded the company with partners in 2019.

Zuercher previously led a public safety software company that went on to be acquired.

“That starts the next phase for us to some extent to growing out the company,” Zuercher said. “The venture capital market is in an interesting place, and so it was a big unknown to us exactly how the market would respond. We raised the capital on the time frame we would have expected and probably had an easier time than we would have expected.”

Prismatic founders: Beth Harwood, vice of marketing and developer relations; Justin Hipple, chief technology officer; and Michael Zuercher, CEO.

The company is at a place in its growth — and in the industry’s growth — “where there’s a very big ‘green field’ market we’re attacking,” he explained.

Known as embedded integration platform as a service, or embedded iPaaS,  “we are one of the few players who’s having a lot of early success, so I think that makes us pretty attractive and makes it easy to believe the vision of the next few years and get on board as an investor,” Zuercher said.

Investor and board member Matt Paulson, CEO of MarketBeat, agreed.
“As businesses increasingly adopt software tools from multiple different vendors, Prismatic sits in the middle and allows for the seamless sharing of data between different technology platforms,” he said.

“The key to Prismatic’s early success is that it’s a versatile and rock-solid platform that allows companies to share data with their customers. Integration platforms have to work perfectly nearly 100 percent of the time, and Prismatic does that.”

The company raised more than $3 million in seed funding in 2021 with investors that included Falls Angel Fund II and executives from across the tech sector.

“We have absolutely become a platform that realizes the original vision we had, which was to provide a platform that made it as easy as possible for software companies to connect their product to other software products,” Zuercher said. “We have a lot of customers having a lot of success, but there’s always more to do.”

One early customer, Raven Industries’ applied technology division, continues to be a customer under new parent company CNH Industrial.

“Our clients are all software companies,” Zuercher said. “We don’t have any real focus on a vertical market of software. We’re a horizontal platform across vertical markets, and that’s what’s really exciting about this market to us. It does have really broad carryover across verticals.”

Prismatic has demonstrated “that it’s possible to build a high-growth software company in South Dakota,” he said, adding the company “has built a world-class team and attracted a national customer base.”

Kansas City-based Five Elms Capital, which specializes in early-stage and growth-stage companies in the software, technology and health care industries, led the Series A funding. Additional capital was provided by Homegrown Capital, Falls Angel Fund and other local investors.

The funding will be used to grow staff, support marketing and invest in research and development. There are more than 20 employees, with a core group in Sioux Falls and others nationwide. All work remotely.

“We’ve had maybe the best quarter of hiring I’ve ever had in my career as far as quality of candidates and our ability to get really quality people on board,” Zuercher said. “We have a general softening in the market that started with the big tech layoffs, and I think that trickles down. We’re having a lot of success as a company, and it allows us to hire into a softer market.”

Big picture, the emerging industry has a lot of room to grow, he said.

“We started when the market didn’t have a name,” he said. “In late 2020, you started getting officially named (an iPaaS), and I think we’ve been able to be a thought leader in that space. We were in the right place at the right time.”

Paulson agreed.

“Prismatic has seen healthy growth, but it’s still early innings,” he said. “The company is attacking a big space, and there’s easily room for the company to be 20 times larger than it is today.”