Foursquare, Podium & GoDaddy: The Localogy M&A Roundtable

Funding Watch is Localogy’s series that tracks funding to SMB-focused startups and tech providers. See the rest of the series here.


The last few weeks have seen lots of activity in funding and M&A activity in the local commerce and SMB Saas sectors. This is counterintuitive for a period in which investor confidence has started to hibernate. But still, many of these deals are logical, and some kicked off before we had a global pandemic on our hands.

So to break down the drivers and dynamics, we invited domain experts to the Localogy table. And because there are too many deals to tackle in one roundtable, we chose the three most notable ones. They include Foursquare’s merger with Factual; GoDaddy’s acquisition of Neustar’s registry business, and Podium’s funding.

And our expert panel? Kind enough to join us were Chris Legg, senior managing director at Progress Partners, and Luca Sechi, VP of corporate strategy at Endurance International Group. Both have lots of perspective and experience in tech-sector investing and M&A activity. So we teed them up to do their thing.

See the interview preview below, along with bulleted takeaways.

Podium Receives $125 Million

— Podium provides customer reviews optimization and interaction tools for SMBs. That includes customer messaging and a more recent move into payment processing.

— Last week it closed a $125 million Series C led by Y Combinator’s Continuity fund, with participation from GV, Accel and a handful of others. This brings its total funding to date to $218 million and a post-money valuation of $1.5 billion.

— Podium’s feature expansion from reviews optimization to messaging and payments creates more stickiness and critical support for SMB operations.

— Legg asserts that those customer messaging functions are more important now than ever. And they provide a nice entry-point for longer SMB relationships as Podium expands its suite.

— In that sense, Podium’s freemium model has been successful in signing up 50,000 SMBs. That not only shows growth and market validation, but there’s lots of headroom according to Sechi, given the addressable market of tens of millions of SMBs.

Podium Raises $125 Million, Pivots to Messaging

GoDaddy Acquires Neustar’s Registry Business

— Neustar’s domain registry business joins GoDaddy’s website services suite, a classic vertical integration play says Sechi.

— This also aligns with goals for customer retention and recurring revenue. Domain hosting is a nice recurring revenue stream, and a customer base that can be upsold to other website services.

— That suite of services is something GoDaddy continues to expand, pursuant to better customer lock-in, and an ARPU-boosting bundle. It has already added marketing and social capabilities on top of the core presence products, for example.

— Greater vertical integration will also allow GoDaddy more control to set market prices and keep domain registration costs low. There’s incentive to do so, says Sechi, to keep barriers low for SMBs to start a relationship early, then grow into the aforementioned suite of services.

— This also parallels the Podium discussion in that “freemium” can lower barriers to adoption. Sechi asserts that the low price of website registration — sometimes as low as $10 per year — is essentially a freemium play.

Website-Builder M&A Continues: The GoDaddy Edition

Foursquare Merges with Factual

— Foursquare and Factual have merged with undisclosed financials. While keeping the Foursquare Moniker, this brings together two of the most extensive location intelligence providers.

— Location intelligence players benefit from a certain network effect: By having more tracked devices, they can have larger samples by which to glean insights from foot traffic as well as more diverse and population-representative samples.

— This deal also brings together capabilities and competencies: Factual strenth in audience profiles joins Foursquare’s places and POI data.

— On top of that, there are headwinds in the location intelligence space with both legislative measures (GDPR, CCPA) and private sector measures (iOS 13 restrictions). These factors compel consolidation for players to pool resources and counteract data-collection challenges.

— We’ve been predicting consolidation in this sector over the past 6 months, and now that goes into hyperdrive in the current environment where recessionary economics will compel moves to gain economies of scale.

— Legg aligns with our prediction and believes there’s still lots more consolidation to come among the sector players operating in the 30-50 million valuation range.

Foursquare: Factual Merger is All About Exponential Gains

 

See below for a preview of the roundtable discussion. And stay tuned for the full episode, which will be featured in an upcoming Localogy video series.

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