Startups Venture

Taking Stock Of Austin’s M&A Year

2018 has been a busy year for acquisitions of Austin startups.

As the year starts drawing to a close, we decided to take a look at the largest known startup acquisitions the city has seen this year. In addition, there were a number of significant deals where the sales price was not disclosed. So while we’ll mention them later in the piece, they’re not included in the leading group.

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Austin has been a regular topic here at Crunchbase News, especially its venture inputs. Turning our sights to M&A outputs is, therefore, all the more important.

“I think 2018, in general, has been a great year for fundraising, exits, and IPOs in the Austin area,” said LiveOak Venture Partners’ Mason Rathe. “When it comes to exits, it’s notable that in many cases when an acquisition is made, the acquiring company keeps the teams here. That says a lot about the culture here. It’s something that not only companies are noticing, but they don’t want to disrupt.”

Let’s start with the big, priced deals, and then take a look at other transactions that you should know about if you want to understand Austin.

Silver Lake Takes Majority Stake in WP Engine

CompanySectorMajority shareholderMajority Shareholder's HQDeal Size
WP EngineWordpress hosting Silver Lake PartnersMenlo Park, CA$250M

In early January, private equity firm Silver Lake Partners took a $250 million majority stake in WordPress host WP Engine. Now this was an interesting deal because all the PR surrounding it framed the transaction as a private equity investment. But those in the know indicate that it was a buyout disguised as an ‘investment.’ “That’s what they [Silver Lake] do,” one source said.

Sources also told me that the Austin VC firm Silverton Partners cashed out entirely as part of the transaction. Prior to the deal, WP Engine had raised $40.7 million from investors such as Silverton and North Bridge Growth Equity. In March, the eight-year-old company told me that it had recently achieved more than $100 million in annual recurring revenue and that it had more than 75,000 customers globally.

Majority-stake private equity investment, or majority-stage private equity buyout, the deal was big and helped show that Austin-based companies can not only grow large and sell big, but that they can hit nine-figure revenue while doing both.

Move Acquires Opcity

Acquired CompanySectorAcquiring CompanyAcquirer's HQDeal Size
OpcityReal estate financeMoveSan Jose, CA$210M

In August 2018, online real estate platform Move announced it was purchasing Austin-based Opcity, in what LiveOak’s Rathe described as “one of the quickest success stories Austin has seen.”

“Going from our seed investment to a strong exit in less than 24 months is another example of how strategic acquirers are targeting Austin,” he told Crunchbase News.

Opcity was founded in late 2015 and had raised $27 million in a Series A round in May 2017 before it sold. The company, which connects real estate agents and mortgage loan officers to pre-screened, live leads, had been partners with Move “since day one” prior to the acquisition taking place, explains Founder and CEO Ben Rubenstein.

“We’d been lightly talking about an acquisition for a while but those discussions got more serious over the summer,” Rubenstein told Crunchbase News. “It really was a logical fit. Their business has been focused on helping consumers with search and discovery and our business is around the conversion process, and helping them get all the way to close. So, it really made sense for both companies, and will allow us to scale much faster.”

The acquisition closed on Oct. 11, and Rubenstein will remain CEO of Opcity, reporting to the CEO of Move. Currently, the company has over 400 employees. By this time next year, Rubenstein projects his employee count to number “deep into the 600s.”

He emphasizes the company had not operated with this sort of exit necessarily in mind. “I think if you build a company to get acquired,” Rubenstein told Crunchbase News, “you’re not going to build a healthy, sustainable organization.”

GoDaddy Buys Main Street Hub

Acquired CompanySectorAcquiring CompanyAcquirer's HQDeal Size
Main Street HubMarketing platformGoDaddyScottsdale, AZ$127M

Also in January, internet domain giant GoDaddy announced it was buying Main Street Hub, a social media marketing platform, for $125 million in cash plus up to $50 million in potential earnouts. Founded in 2010, Main Street Hub had raised a total of $46 million prior to being acquired from investors such as Vista Equity Partners and Bessemer Venture Partners. The deal closed in July.

Other Deals Of Unknown Size

As mentioned above, a number of significant deals took place in Austin during 2018 in which the dollar amount was undisclosed. We felt we would be remiss not to include them here.

  • In February, grocery store giant H-E-B purchased Favor, an on-demand delivery service. The company first launched in 2013, building a product that focused on the Texas market. It stood out among its competitors due to profitability, and cash flow positivity last year. Favor reportedly turned down several potential suitors but believed the H-E-B union made sense. In September, Favor CEO Jag Bath was quoted by Silicon Hills News as saying that since the acquisition, Favor had added 20,000 more delivery people and expanded into 84 cities, up from 50 cities. He said it also planned to be in 114 cities by year’s end. Favor had previously raised $34 million over time from investors such as Draper Associates, SIlverton Partners and S3 Ventures.

  • Spredfast, which makes software for managing social media, was picked up by San Francisco-based Lithium Technologies via its parent, Vista Equity Partners, for an undisclosed amount. Since its inception, Spredfast had raised $138.1 million from investors such as Riverwood Capital and Lead Edge Capital,  according to its Crunchbase profile.

  • On Nov. 20, Capital One announced the acquisition of Austin-based Wikibuy, a free online shopping price and coupon tracker. Capital One SVP Joe Poellnitz said in a statement that with the purchase, Capital One had “acquired an innovative startup that helps customers save time, money, and enables them to shop with confidence.” Over the last three years, Wikibuy grew to two million members who’ve saved more than $50 million this year, according to a company blog. As in the case of most of the acquisitions that take place here, Wikibuy will remain in Austin.

  • And on Nov. 14, our own EiC Alex Wilhelm reported on how software giant Microsoft picked up Austin-based dev shop XOXCO for an undisclosed amount. Although XOXCO raised just $1.5 million during its life as a private company, the deal was notable as it fit into general acceleration of Microsoft’s M&A work.

Illustration: Li-Anne Dias

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