Zeta Global, which provides cloud-based CRM, on Thursday revealed a $140 million funding round that it will use to acquire other marketing tech companies.
The round was led by GPI Capital and Blackstone’s GSO Capital Partners. The funding is earmarked explicitly for an acquisition, though the company or category are yet to be determined, said COO Steve Gerber.
Zeta’s M&A strategy over the past three years has been to buy its way into a software-as-a-service (SaaS) business model.
Zeta has raised a total of $380 million and bought nine mar tech startups in the past nine years. In 2015, Zeta raised a $125 million round that it used to acquire the eBay Enterprise CRM division and then Acxiom Impact, the data giant’s automation technology solution.
Even with a crowded field of buyers and some categories where the startup pool is thinning, Gerber said many mid-market businesses fly below the radar of major dealmakers.
“There’s a great convergence playing out with telecom companies moving further into content and advertising and companies that are broadly in our competitive set, like Oracle, Salesforce and Adobe, all of which highly acquisitive,” he said “We are as well, and we think there’s a lot of value in the market for startups that don’t necessarily move the needle for an Oracle or Salesforce but fit into our strategy.”
Going into 2015, recurring subscriptions accounted for less than 20% of Zeta’s revenue, Gerber said. Now more than half of the company’s revenue is recurring.
“We remain focused on businesses that have SaaS models and strong recurring revenue streams,” he said.
The deal it will consider this year is more likely to be for a startup than another enterprise spin-out, Gerber said, but Zeta’s two previous acquisitions underscore “the opportunity we see to take over companies that aren’t receiving a focus from bigger parent companies but where we see a chance to really accelerate their growth.”
