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Gov Tech Biz Quarterly Roundup: Q1 2024 With Jeff Cook

The year ’s first quarter saw 2024 off to a sound start in gov tech transactions, with notable deals involving OpenGov, Axon, gWorks and Springbrook, according to market expert Jeff Cook.

A businessman in a dark blue suit and light blue tie gestures to a graph of first quarter activity.
The first quarter of 2024 ushered in a strong start to the year, building on the momentum the gov tech market established in the second half of 2023. This past quarter marked the fourth consecutive quarter of increasing transaction volume and was the most active quarter since Q1 2021; in addition, it saw more announced deals than any quarter in the last two years. Our internal data suggests Q1 2024 transaction volume of approximately $3.6 billion, $300 million more than the $3.3 billion in Q4 2023 and markedly higher than the $2.2 billion in Q1 2023.

Beyond the headline value, the composition of activity was also notable. All types of transactions and industry sub-segments were active in the quarter, from landmark transactions like OpenGov’s $1.8 billion acquisition by Cox Enterprises, a healthy amount of add-on acquisitions by private-equity-backed consolidators like gWorks and Utility, acquisitions by public companies like Axon, major funding rounds from companies like RapidSOS, and a multitude of funding rounds for early-stage companies. This activity stands in contrast to prior quarters where the number and type of transactions were more concentrated, and where a small number of deals drove the majority of transaction volume.

A major benefit of the growth in deal volume is that it is helping to establish a clearer view of “market” valuation multiples. Market cycles typically create a bid-ask spread between buyers and sellers, making sellers reluctant to “test” the market without a strong sense of how their business will be valued. Over the last two years a decline in deal volume, paired with erratic and inconsistent valuation multiples, created murkiness around how gov tech businesses should be valued and kept many potential sellers on the sidelines. In Q1 2024 we saw not only more deals and more data points, but also more consistency in valuations where multiples feel highly correlated to financial key performance indicators like revenue growth, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margins, Rule of 40 metrics and revenue retention figures. We believe these data points will give buyers and sellers a much better sense of current market values. This clarity, combined with a more stable interest rate environment, debt markets and institutional investors that increasingly need to deploy capital, should continue to buoy activity in the quarters ahead.

The volume metrics above and transactions below are for deals announced between Jan. 1, 2024, and March 31, 2024.


OpenGov Receives Majority Investment from Cox Enterprises

Why it Matters: Q1 2024 saw one of the landmark transactions in recent gov tech history in OpenGov’s majority investment from Cox Enterprises. OpenGov was one of the original cloud-first businesses focused on modernizing how governments operate, and the transaction serves as a milestone for how the adoption of modern, software-as-a-service (SaaS) solutions in government is not an emerging trend but is here and now. OpenGov’s $1.8 billion valuation makes it among the most valuable businesses in gov tech. Cox Enterprises has been a longtime investor in OpenGov, originally investing in the business in 2021 when it led a $50 million Series D investment, then made a subsequent investment in conjunction with OpenGov’s acquisition of Cartegraph in 2022 before buying a majority stake in this transaction. The investment positions OpenGov well for the future — gov tech is a market with long investment cycles where building and scaling new products requires the type of long-term, patient capital that Cox brings to the table. While nothing major is anticipated to change as a result of the transaction, OpenGov plans to accelerate investments in product and hiring, alongside a deeper focus on pursuing strategic acquisitions.


Axon Acquires Fusus

Why it Matters: 2023 ended up being a quieter-than-expected year for M&A by the major public safety platforms like Axon and Motorola. We expect that to change in 2024 and saw the first sign of this through Axon’s $240 million acquisition of Fusus Technologies, a real-time crime center platform based in Peachtree Corners, Ga. The acquisition marks a significant milestone in the relationship between Axon and Fusus, which formed as a strategic partnership in May 2022 through Axon’s minority investment in the business. The acquisition highlights a major trend we see defining public safety in the years ahead, putting real-time video and data in the hands of first responders to enhance emergency response. Fusus specializes in aggregating live video, data and sensor feeds from diverse sources which enhances situational awareness and investigative capabilities, empowering law enforcement professionals with the critical tools necessary for swift decision-making and responsive actions.

GSV Announces Two Transactions, a Majority Investment in SOMA Global and the Acquisition of STRAX Intelligence

Why it Matters: Greater Sum Ventures (GSV) announced two public safety transactions during the quarter, the first being a majority investment in SOMA Global, a cloud-native public safety platform with critical response, incident management, corrections and administrative capabilities; and the second being the acquisition of STRAX Intelligence Group, a leader in cloud-native sensor fusion and collaboration solutions. The transactions follow GSV’s acquisition of Utility in November 2023, the first piece of a platform business focused on building a portfolio of integrated solutions for law enforcement and first responders. GSV carries government technology market experience, even before its investments in Utility and SOMA Global, having invested in Catalis (formerly Government Brands). The transactions mark continued consolidation in the public safety market and the emergence of yet another active consolidator in public safety. Notably, SOMA Global was a portfolio company of active gov tech investors Weatherford Capital, who also made an investment into Utility alongside GSV in November.

KKR Has Agreed to Acquire mdf commerce

Why it Matters: Another significant private equity deal (and a rare take-private of a public gov tech company) was the agreed upon acquisition of mdf commerce, a seasoned government procurement vendor, by KKR through its mid-market Ascendant Fund. The all-cash transaction, valued at approximately $189 million, illustrates the sustained attraction of government technology to private equity investors. Today, the Montreal-based mdf commerce provides procurement solutions to over 6,500 government agencies and more than 650,000 suppliers across Canada and the United States. mdf commerce previously acquired state procurement business Periscope, and additional M&A within procurement and payments is anticipated to be part of the future growth strategy. Procurement has been an active sector in recent quarters, with multiple acquisitions by strategics like Euna Solutions as well as a number of capital raises by growth-stage businesses.

gWorks Acquires Freedom Systems

Why it Matters: gWorks, a Nebraska-based leader in solutions tailored for small- and medium-sized government organizations, acquired Freedom Systems, a Pennsylvania-based business providing a portfolio of solutions to municipal clients. gWorks has been an active acquirer, and this acquisition marks gWorks’ fourth acquisition since its 2022 investment from BV Investment Partners, a Boston-based private equity firm, and reflects the company’s strategic expansion efforts. Freedom Systems’ platform handles revenue, tax, equipment and other types of management operations. Today, gWorks offers human resources, utility billing, finance, payments and operations solutions to over 2,500 small- and medium-sized government organizations, including rural utilities, special districts and local governments.

Springbrook Acquires Pulse Software

Why it Matters: Now more than ever, public-sector agencies are facing staffing challenges as an aging workforce retires at an increasing rate. Consequently, Springbrook, a leader in cloud-based government technology solutions, acquired Pulse Software, a prominent provider of talent and human resources software with a special focus on the public sector. Pulse Software, a 13-year-old Australian-based business, is designed to handle recruitment, onboarding and performance management, with solutions capable of deploying individually or as a suite. Springbrook will integrate Pulse Software’s technology into Cirrus, its flagship enterprise resource planning (ERP) finance platform. The deal marks Springbrook’s fourth acquisition since it was acquired by Accel-KKR as a carveout of government technology vendor Accela.

Vertical Knowledge Acquired by Babel Street

Why it Matters: Another strategic deal this quarter was Babel Street’s acquisition of Vertical Knowledge, a leading data products, insights and intelligence company with a strong presence in federal government. Based in Ohio, Vertical Knowledge serves as a mission-critical partner for commercial and government organizations alike with solutions that drive informed decision-making through unearthing critical insights from publicly available information. Babel Street, founded in 2009, provides analysis-ready data regardless of language, proactive risk identification, 360-degree insights, high-speed automation and seamless integration into existing systems. The acquisition will significantly expand Babel Street’s data sourcing, enrichment and analysis capabilities, transforming high-stakes identity and risk operations into a strategic advantage for organizations worldwide. Vertical Knowledge was backed by PSG Equity, while Babel Street is a portfolio company of Veritas Capital.

BusPatrol Receives Investment from GI Partners

Why it Matters: BusPatrol, the largest school bus safety provider, received a significant growth investment from GI Partners this quarter. This investment will enable BusPatrol to continue to rapidly scale and diversify products within the public safety space. With the investment from GI Partners, BusPatrol has significant capital to deliver its safety solutions to additional school districts across the country and enhance its industry-leading offering. Founded in 2017, BusPatrol partners with school districts, law enforcement agencies and municipalities to deter illegal and dangerous passes of stopped school buses. FIT Ventures has been a significant investor and equity holder in BusPatrol since 2017 and remains committed to the long-term vision and growth strategy of the business.

Euna Solutions Acquires EqualLevel

Why it Matters: Another example of add-on activity by a private equity-backed platform was Euna Solutions’ acquisition of EqualLevel, a Rockville, Md.-based provider of procurement marketplaces. The acquisition enhances Euna Solutions’ ability to deliver Procure-to-Pay automation to public-sector agencies by optimizing spend and reducing costs, all while ensuring legal and contract compliance. EqualLevel’s platform includes an AI-powered savings and compliance adviser, invoice automation, real-time search, supplemental funds management and a cooperative supplier network. This acquisition marks Euna’s third public-sector procurement add-on in the last 18 months, following its previous acquisitions of Ion Wave Technologies (January 2023) and DemandStar (December 2022).

Granicus Acquires SmartGov

Why it Matters: Licensing and permitting are essential and increasingly complex functions of government that represent important, high-volume interactions between agencies and their communities. Granicus, the leading provider of government experience solutions, acquired SmartGov from Brightly Software, a Siemens company. SmartGov is a cloud-based permitting, compliance and licensing (PCL) solution trusted by hundreds of United States cities, counties and state agencies to digitize vital services for residents and automate PCL processing for government professionals. The SmartGov acquisition bolsters Granicus’ existing PCL offering, which has been built up over time with add-on acquisitions like Calytera (October 2020), and is a strong addition to its broader Government Experience Cloud platform.

Avenu Insights & Analytics Acquires Judicial Innovations and Finvi’s State and Local Government Division

Why it Matters: Avenu Insights & Analytics was quite active this quarter having completed two acquisitions in the span of a few weeks. In January, Avenu acquired Finvi’s state and local government division, which is known for its solutions that streamline operations, enhance revenue recovery and improve constituent communication. Its flagship products, RevQ+ and FullCourt Enterprise, are leaders in omnichannel communication, data integrity, automated workflows and modern payment solutions. Less than a month later in February, the Virginia-based Avenu acquired Judicial Innovations. Headquartered in Alpharetta, Ga., Judicial Innovations provides cloud-based payment and case management solutions for more than 180 state and local government agencies. These two deals mark Avenu’s first add-ons since their acquisition by Arlington Capital Partners in October 2023.

Miovision Acquires Traffic Technology Services

Why it Matters: Miovision, a leading provider of scalable intelligent transportation solutions aimed at alleviating traffic congestion and enhancing safety, acquired Traffic Technology Services (TTS), a connected vehicle platform. The acquisition reinforces Miovision's commitment to innovation and adds a premium portfolio of vehicle-to-everything (V2X) services, including Audi Traffic Light Information, which empowers drivers with real-time insights to optimize their routes and reduce fuel consumption. TTS has agreements with 180 agencies and captures insights from more than 80,000 intersections, expanding Miovision’s footprint to a total of 170,000 intersections. Miovision, based in Kitchener, Ontario, has been among the most active acquirers in gov tech, having completed six acquisitions in less than three years, putting the company at the forefront of the increasingly dynamic smart transportation market.

Autoagent Data Solutions Acquires MuniciPAY

Why it Matters: Autoagent Data Solutions, the leading provider of escrow tax payment processing for local government, expanded its offering with the acquisition of MuniciPAY. MuniciPAY is a citizen payment gateway that enables municipalities to accept a full suite of payments from utilities to parking tickets to DMV fees. Founded in 2008, MuniciPAY has built a government service model that is centered around the daily payment challenges of its customers with solutions that maximize efficiency. The addition of MuniciPAY expands the breadth of Autoagent’s offering and will enable local government agencies to facilitate real estate tax and direct payments from citizens all in a single platform. Autoagent has been majority backed by Stella Point Capital, a New York City-based private equity firm, since 2021.

HALO Raises $20M from Volition Capital

Why it Matters: Body cameras, and their usage in law enforcement, sit at the center of transparency initiatives and more effective emergency response and represent a key source of digital evidence used in investigations. In recent years, the use of these devices has expanded from law enforcement to private-sector organizations including physical security, retail and other verticals. Following this trend, HALO received $20 million in a Series A funding round, led by Volition Capital. HALO distinguishes itself with a subscription-based bodycam and cloud-based digital asset management platform designed to protect individuals and businesses across various sectors, including retail, health care, transportation, private security and law enforcement. With the infusion of fresh capital, HALO is poised to further enhance its product innovation, bolster hardware and software platforms, introduce new AI and analytics features and expand its market reach across the United States and Europe.

RapidSOS Receives $75M Investment from BlackRock

Why it Matters: Another addition to the series of public safety investments was RapidSOS’ $75 million investment from BlackRock, rounding out its $150 million Series C round. Founded in 2012, RapidSOS specializes in sharing real-time data with emergency responders and has now raised more than $300 million, making it one of the highest-funded businesses in public safety. The New York-based company plans to use capital from this round to accelerate its AI efforts and maintain its position at the forefront of product innovation. In 2023, RapidSOS was utilized in more than 170 million emergencies. BlackRock joins a growing consortium of investors that have backed RapidSOS including Honeywell, Insight Partners and NightDragon.

Mark43 Raises $55M from General Catalyst

Why it Matters: Yet another major growth capital raise in public safety was General Catalyst’s $55 million investment in Mark43. Mark43 is one of the pioneering providers of cloud-based computer-aided dispatch, record management systems and other mission-critical solutions, serving more than 250 public safety agencies. News of the investment came shortly after it was announced that Mark43 had been selected to upgrade technology infrastructure for the Port Authority of New York and New Jersey, the largest transit-related police force in the United States. General Catalyst has been a longtime investor in Mark43, originally investing in 2013. Other investors in the New York-based company include Tiger Global, Avenir, Breyer Capital and Spark Capital, among others.

Civic Roundtable Raises $5M

Why it Matters: With higher turnover and increasing labor shortages, there has been a growing focus on revolutionizing how government workers communicate, share insights and implement solutions. Civic Roundtable, a startup that focuses on helping public officials build information-sharing networks, has raised $5 million in a seed round led by General Catalyst. The capital will go towards accelerating Civic Roundtable’s expansion into new areas of government coordination, allowing for the development and growth of mission-driven teams dedicated to introducing innovation and effectiveness throughout the public sector. The raise is evidence that the company continues to build on its early traction in homelessness prevention, economic development, election administration and cybersecurity. Since launching the company’s first product in 2023, Civic Roundtable has onboarded 5,000 users representing over 500 government agencies.

Thentia Raises $38M

Why it Matters: As community development continues to be one of the most active sectors in government technology, there has also been increased activity in the surrounding regulatory and compliance landscape. Thentia, a licensing and regulatory technology vendor, secured $38 million in a Series B extension round, led by existing investors First Ascent Ventures, Spring Mountain Capital, BDC Capital and Espresso Capital. Thentia Cloud, Thentia’s end-to-end SaaS ERP platform, purpose-built for government regulators, digitizes, streamlines and consolidates all essential regulatory functions within a single cloud-based environment, empowering users with a unified view of all license activities. The capital from the funding round will be used to scale operations, foster accelerated growth, invest in artificial intelligence and expand the company’s geographic footprint.

Champ Titles Raises $18M

Why it Matters: Champ Titles, a Cleveland-based provider of digital vehicle titles, registrations and lien systems of records, raised $18 million in a Series C funding round led by Point72 Ventures, with participation from W.R. Berkley Corporation, Eos Venture Partners, Guidewire Software and Rev1 Ventures, among others. Champ Titles plans to use the funds to fuel its ongoing growth, as the company has made tremendous progress over the last year, including onboarding new states like New Jersey, Kentucky and Illinois and expanding its relationship with West Virginia through the creation of the first National Digital Titling Clearinghouse, growing revenues by more than 300 percent. The investment further illustrates the rapid digitization occurring across the government landscape.


GovTech Biz
Jeff Cook is a managing director at Shea & Co., an investment bank that has advised in more than 20 gov tech deals (investments and exits) in the past 5 years.