November SMB News Round-up

Here’s a look at the SMB tech companies making news this past month.

GoDaddy Looking to Spend BIG Money on HEG

It’s go big or go home with GoDaddy’s latest acquisition in the works. The company is in exclusive talks to buy HEG, Europe’s largest independent web hosting firm, for $1.8B USD. HEG, currently owned by PE firm Cinven, serves mostly SMBs and has over 1.7 million customers. HEG’s hefty price tag could make GoDaddy even more levered — currently with $1.1B USD in debt.

GoDaddy outbid competitors including United Internet AG and Endurance International Group offering a valuation multiple of 12x forecast 2016 core earnings. The purchase will help GoDaddy reinforce its presence in Europe, give it higher-margin products, and build out its hosting offering further.

Disgraced But Not Out, Ex-Lending Club CEO Launches Competitor

Renaud Laplanche, the disgraced former CEO of Lending Club, has started a new venture in the lending space in direct competition against his prior business. Laplanche was forced out of Lending Club after several scandals broke out earlier this year. The new company, Credify Finance, has yet to launch. Details are sparse on how it aims to differentiate itself amongst a very crowded lending landscape in the USA. Laplanche is working on the new venture with Jeffrey Bogan, former Head of Investor Group at Lending Club who was also let go following the scandal. Questions remain whether a non-compete clause was in place, and if so, will it be enforced.

LendingTree Acquires CompareCards

LendingTree announced it has acquired CompareCards, a leading side-by-side comparison tool for credit cards and provides consumers with credit education and management. The deal was announced November 16th, with a possible total consideration of $130M USD ($85M in cash plus $22.5M in consideration per year for two years based on reaching growth targets).

This acquisition will allow LendingTree to expand its footprint on desktop and mobile devices. A piece of the acquisition strategy is driven by CompareCard’s strong search engine presence and proven SEM strategy. This also helps LendingTree enhance its diversification into non-mortgage products. CFO Gave Dalporto notes that the acquisition will help lower its mortgage revenue as a portion of total sales from 49%.

Sage Impresses With Its Distribution Strategy, Launches New Products

Sage is continuing to push its “transformation efforts” to reach a goal of “giving business owners a ‘world where they have zero back-office admin’ by 2020.” In fiscal 2016, Sage added 215 ISV partners, expanding its distribution network. CEO Stephen Kelly has said that 27 new cloud-based products are slated for launch in the next 12 months. Recurring revenues at the FTSE100 company have also grown at the fastest pace in a decade.

Furthermore, Sage is taking its Sage Summit on the road with a 9-stop road show from Paris to Toronto. Traditionally held only in the US, The Sage Summit Tour will be an opportunity to build Sage’s footprint across the globe and have more direct interactions with entrepreneurs and SMBs.

Shopify Partners with Shyp

Shopify has gone above just being a eCommerce platform to also helping its vendors figure out the shipping and fulfillment portion of the supply chain. Shopify announced a partnership with Shyp, a packing and shipping platform that allows users to compare carriers, select rates and offer end to end fulfillment workflow services. Shopify vendors located in San Francisco, New York City, Chicago and Los Angeles can outsource the entirety of its fulfillment workflow to Shyp, which will provide pick up, packing and shipping of parcels.

Yelp Struggles Internationally, Still Posts Profit

Yelp is following in Groupon’s footsteps, pulling back its international efforts and focusing back on its stronghold in North America. Overall, its quarterly earnings had a surprise profit of $2.1M USD vs net loss of $8.1M in Q3 2015.

Yelp also reported it will see a restructuring charge of $2-$4M in Q4. The company is laying off 175 of its 4,350 employees, mostly sales and marketing staff outside of the U.S. and Canada. After numerous acquisitions to try to win the restaurant review space in Europe, this feels like a definite setback for the company.

HubSpot Goes Freemium

Hubspot introduced a no-cost tier for its marketing software products at its annual Inbound event earlier this month. Introduced as HubSpot Marketing Free — the product offers the trio of HubSpot Marketing, Sales and CRM — available for free to start and grow with the teams. This is a smart move on HubSpot’s part, as it gets SMBs on to their platform early.

At SurePath Capital Partners we help startups raise the capital needed to become market leaders. When the time is right, we help our clients achieve profitable, deliberate exit strategies. We only work with startups in the SaaS, e-commerce and marketplace segments. Across those segments we have a deep focus on companies serving the global SMB market. Say hello:info@surepathcapital.com

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