Eric’s Top 3 – B2B Software


Eric’s Top 3 – B2B Software


SPACInsider contributor Eric Weidemann this week compiled his three favorite potential SPAC targets among B2B software firms. We look at why they are compelling and why each could be a fit for a blank-check merger.

Business-facing software being a fast-growing sector is nothing new. But the growing complexity of the space has provided opportunities for SPACs to pick companies from the depths that would potentially have a harder time telling an IPO story than the consumer software players that make for headlines and splashy listings.

Many of these targets would have traditionally been consolidated by strategic players, and that movement continues with Salesforce’s (NYSE:CRM) $27.7 billion acquisition of Slack last month and Citrix’s (NASDAQ:CTXS) $2.25 billion deal for project management SaaS firm Wrike just this week. But for every Slack, there are many more firms like AvePoint, which announced an agreement to merge with Apex Technology Acquisition Corp (NASDAQ:APXT) in November.

AvePoint supplements the Microsoft Office suite with data migration and security software tools, quietly racking up $148 million in 2020E revenue from this focused business model. The market has so far endorsed Apex’s merger with AvePoint with its shares closing at $15.69 yesterday.

There could be more opportunities for growth by middle market B2B software players with potentially more assertive antitrust authorities under the Biden administration. The Federal Trade Commission and 48 states sued to break up Facebook’s (NASDAQ:FB) holdings last month, and House lawmakers released a report in October suggesting the same for Amazon (NASDAQ:AMZN) and Amazon Web Services (AWS).

Even if these efforts do not result in a fragmentation of the top B2B tech groups, such companies are likely to read the room and be careful about moves that would boost their market share for the time being. That means less competition for white space and potentially sets up a “start your engines” moment for middle market firms that SPACs could fuel.


Front is one such scrappy fighter entering the bout with the goal of taking on Gmail and Outlook for business teams.

The San Francisco-based company has raised $138.3 million since its 2013 founding, most recently $59 million in a January 2020 Series C, according to Crunchbase. This round was led by a number of technology executives including Zoom CEO Eric Yuan and Altassian co-CEO and co-founder Mike Cannon-Brookes.

The rise of social networks has led to a decline in person-to-person email volumes and it has been popular in recent years to predict the “death of email” altogether. But, on the business side, B2B and B2C email volumes have only gone up and the average office worker was receiving 121 emails per day even before the pandemic.

Front’s tools work to clamp down on the extra burdens that come with from these overflowing inboxes with automated features that route customer emails to the correct person, while keeping in-house emails open to shared visibility, analytics and collaboration. Its case studies claim to save workers as much as 10 hours per week.

Front’s client base of over 5,500 companies attests to its value as it includes firms that themselves provide services to facilitate more efficient client communication such as MailChimp, Shopify, Convoy and


Intercom, meanwhile, is coming for Salesforce. It approaches similar problems as Front by setting up native business-to-customer messenger conversations rather than the tried and true email.

Across more than 30,000 client companies, Intercom facilitates about 500 million customer interactions per month. It claims these B2C conversations have involved a stunning 4 billion unique end users since its founding in 2011, or roughly half of the world.

These messenger chatbots have become the ubiquitous doorway greeters of digital storefronts across the interwebs and their capabilities have deepened from mere automated responses. Intercom clients can now lead web visitors on product tours and experiment with a variety of conversational approaches with a code-free build. Intercom’s SaaS platform is scaled down to $39 per month for small businesses and up to $499 per 10 seats at larger clients.

With locked down consumers left to chat with bots rather than checkout clerks in 2020, Intercom’s revenues surged to $125 million, and the company has not needed to raise outside funding since 2018. In that most recent round – a $125 million Series D – Intercom reportedly locked in a valuation of $1.275 billion and has only been growing since.

It brought in new CFO Dan Griggs in August with an IPO on its mind, but told Yahoo at the time that a listing was likely a year or two away as it worked to achieve profitability.

Being a year out from profitability is no obstacle for a SPAC of course, and if Intercom has a dual process in mind, then it likely already has SPACs on the line, if not chatting with their bots.


Those Intercom messenger widgets are increasingly appearing on websites created by Netlify.

Netlify bills itself as the fastest way to build the fastest websites, sporting a serverless “Jamstack” architecture. About 1.3 million developers and businesses have joined Netlify’s platform and large ecommerce players like Verizon, Nike and Danone use it to keep their web presence amorphous and ever-changing to fit with temporary campaigns and events.

Jamstack frameworks are a relatively new approach and have become popular due to their ability to maintain high performance using global edge networks rather than robust server or cloud infrastructure. They work by essentially automatically photocopying web landing pages rather than forcing the architecture to write them anew with each new visitor.

Netlify was a prominent first-mover in Jamstack, but competition is rising. Web and network services giant Cloudflare (NYSE:NET) recently threw its hat in the Jamstack ring and Netlify could see now as a time to for aggressive move to solidify its position as an independent player.

It has raised $97 million to date, most recently a $53 million Series C led by EQT Ventures in March 2020. Netlify went into that raise with a big head of steam having tripled its revenue and customer base year-on-year from 2019. That growth has maintained a high pace as it grew its customer base a further 62% from March to December.

While we’ve seen SPACs able to pull together deals of all shapes and sizes regardless of trust sizes this past year, Netlify does appear to be at a convenient scale for the eight SPACs searching specifically for software targets.  PrivCo estimated Netlify’s valuation at about $500 million at the time of their last raise.

That would be about right for software-searching SPACs an the smaller end of the range like Software Acquisition Group II (NASDAQ:SAII) and Dune Acquisition Corporation (NASDAQ:DUNEU), which each raised $172.5 million. But, depending upon how Netlify has continued to grow its revenues and valuation since then, it may be a bit too small for Osprey Technology Acquisition Corporation (NYSE:SFTW) at the top of the range, having raised $316.3 million at IPO.