Boston’s PTC Goes To Cambridge For Its Latest, SaaS-Focused Deal

Boston-based PTC, a publicly-traded computer software services company, has scooped up Cambridge-based Onshape.

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Onshape offers a subscription-based product that combines computer aided design (CAD) with data management. The deal was approximately $470 million and is expected to close in November, per a press release.

Onshape was founded in 2012 by a multitude of CAD entrepreneurs. It has raised over $150 million in funding to date.

At its core, Onshape helps designers, engineers, suppliers and contractors develop product. It claims that the cloud workspace it provides makes product developers speedier, thanks to collaboration tools and real time analytics. Other features include risk mitigation and IP protection. With subscription-as-a-service (SaaS), customers can have faster roll out and lower costs.

“With traditional file-based CAD, your product designs and intellectual property are subject to unauthorized duplication, data breaches, or even accidental sharing,” according to Onshape’s website. Onshape combats this by basing itself on “any modern web browser,” avoiding downloads, installations, or license codes. Additionally, it claims it has strong authorization and authentication methods.

So why does PTC, a startup born in 1985 that has over 28,000 businesses worldwide, need this startup under its wing?

The Industry Moves

For software services, subscription models these days feel like part of the DNA from day one. There’s the big ones like Slack, a recently-public messaging platform, Flexport, which helps with logistics and freight, and Snowflake, which creates a home for an organization’s data.

And there’s also the smaller startups integrating SaaS as a business imperative. Think Flowhub, which offers a retail management system for cannabis shops, o Grammarly, which helps check a user’s language for typos and other literary nuance.

Yet within CAD and product management, the SaaS model hasn’t quite caught on in comparison to the slew of startups above. For example, PTC just transitioned to offer a subscription licensing option in January 2019.

The acquisition, per the press release, is part of PTC’s larger strategy to grab new customers and “capitalize on the inevitable industry transition to SaaS.”

Plus, as Jason D. Rowley told us in the past: “One of the attractive aspects of software that’s sold on a service model (rather than, say, a one-time purchase of a cardboard box) is that, from an accounting perspective, it converts periodic large capital expenditures into more incremental operational expenses.”

With over a billion in revenue already, PTC’s latest acquisition shows us that despite a big footprint it’s looking to diversify, and innovate within its stable world.

Illustration: Li-Anne Dias