GovDelivery Ripe for Expansion After Acquisition by Vista Equity Partners

GovDelivery’s first client after its 2000 founding now makes up less than one-tenth of 1 percent of its overall business. But that soon will change.

by Julio Ojeda-Zapata, Pioneer Press, St. Paul, Minn. / October 18, 2016
GovDelivery
GovDelivery

(TNS) -- It has been a busy three years for St. Paul-based GovDelivery since the Pioneer Press last profiled the company, which works with government entities to improve how they communicate with their constituents via email and other means.

GovDelivery operates in the “software as a service” market and has doubled its customer base during that time. It doubled its engineering staff and increased its management team, too. It added more communications options, such as hosted video, to its menu of services. It powered such augmented capabilities in part via a number of acquisitions, including one focused on texting.

Last month, GovDelivery was, itself, acquired. It announced Sept. 26 that San Francisco private-equity firm Vista Equity Partners had bought it for $153 million, a move it said will position it for further staff and business expansion. GovDelivery was sold off by Pennsylvania-based Actua Corp, which acquired it in 2009.

Vista, which refers to itself as the country’s biggest technology investor, largely specializes in snapping up software-as-a service companies like GovDelivery. Vista, though not itself a software company, would rank fifth in size as such worldwide, GovDelivery Chief Executive Scott Burns said.

In other words, Burns believes, GovDelivery and Vista fit nicely together.

Vista “will help us take (us) to three or four times our current size,” Burns said. “It’s a good time to align ourselves.”

STARTED WITH ST. PAUL SNOW ALERTS

GovDelivery will need such solid backing as it continues to ramp up services, which now provide an online-communications platform for an estimated 2,000 government entities of all sizes, from federal agencies to local municipalities. That’s up from about 1,000 just three years ago.

Burns ticked off what he said are success stories over the last three years, all involving enhanced government-agency communications with constituents in order to bring about improvements of all kinds.

He said GovDelivery helped the state of Michigan beef up its roster of eligible foster parents and summer-meals participants; worked with various states’ departments of resources nationwide to hike license sales; enabled the U.S. Department of Veterans Affairs to score increased veteran-benefits sign-ups; and collaborated with transit authorities in Minnesota and the San Francisco Bay Area to keep residents better apprised of commute times and road construction.

GovDelivery’s first client after its 2000 founding — the city of St. Paul, which needed to better get out snow-emergency information — now makes up less than one-tenth of 1 percent of its overall business.

The company is on track to register about $40 million in revenue this year, with consistent 20 percent to 30 percent yearly growth in recent years. Revenue has increased about 600 percent since 2009.

Between 25 million and 50 million people are receiving GovDelivery-hosted e-mails and other communiques in about 5,000 subject areas per day, Burns noted.

The trick, he said, is increasing the relevance, timing and sophistication of the information as recipients have themselves become more demanding in what they expect of their officials.

STREAMLINING GOVERNMENT

“If you can FaceTime your family, you start to wonder why you have to wait in line for four hours at a government counter to get a permit,” he noted.

A new, video-rich “learning platform” lets governments post clips on such regulated activities as opening a small business, cleaning a fishing boat that has been exposed to Eurasian watermilfoil, and preparing a hospital for an influx of zika-virus patients.

GovDelivery boosted its capabilities with a handful of recent acquisitions that included government-focused online-hosting company NuCivic, of New York, in December 2014, and mobile-message specialist Textizen, of San Francisco, in July 2015.

GovDelivery’s management team also increased. Originally composed only of its chief executive officer and a chief operating officer, it expanded last year to include a chief financial officer, a chief marketing officer and a head of sales.

The company employs about 230, including 150 in downtown St. Paul’s Hamm Building, and the rest divided between offices in Washington, D.C., and the United Kingdom.

It expanded its Hamm digs in 2012 and has remained loyal to downtown St. Paul. That isn’t likely to change under new ownership, Burns said.

A downtown is much better for worker morale than a suburb, he believes, and downtown St. Paul is a stand-out because of dining, sports venues and public transit. Housing nearby is diverse and affordable, he noted.

But St. Paul has work to do if it is to attract other companies like GovDelivery amid stiff competition from places like Minneapolis’ North Loop, which is lately a hotbed of business-company activity, he added. Potential downtown venues are desperately in need of upgrades to properly accommodate companies like his, he said.

“The private sector will need to make some up-front investments to make sure the buildings are ready for employees of 2025 and not 1925,” he said.

 

©2016 the Pioneer Press (St. Paul, Minn.) Distributed by Tribune Content Agency, LLC.