Welcome to the inaugural edition of “Software PE Pulse,” a new format designed to keep you updated on the latest private equity transactions in the lower middle market software space. We keep a close eye on this corner of the market and wanted to share some context on some of the recent deals we’re looking at.
In this roundup, we’ll dive into four significant deals that caught our attention over the past seven days. They span software for property management, fire & emergency medical services, staffing, and test automation. Let us know your thoughts on the format.
Rentvine raised $74m from Mainsail Partners (Aug 26)
Rentvine is a software platform for small and medium-sized (SMB) property managers. They were started by David Borden (a serial entrepreneur in the property management industry) as a response to the lack of best-in-class software for the industry that handled the entire process end-to-end.
One of the core features they have is trust accounting, an accounting nuance unique to the property management industry. Basically, there are regulations that require property managers to keep tenant rent payments and security deposits separate from other business bank accounts. As property managers, using a trust account allows you to keep tenant funds separate (as they need to be) and, if set up correctly, are easily auditable.
Trust accounting is just one of the many things that Rentvine provides, though. They have solutions that cover just about every workflow that a property manager faces on a daily basis:
- Tenant screening
- Leasing
- Document management & eSignatures
- Maintenance
- Reporting & communication
While there aren’t public usage metrics, their CEO has mentioned some customers login to Rentvine in the morning and use it all day. It wouldn’t surprise me if that’s true.
Property management is not a new industry and there are other software platforms that already exist. Rentvine seems to differentiate in the following ways:
- Custom owner statements
- Highly configurable custom fields for properties
- Lots of integrations and an easy-to-use API
- Strong customer support
- Intuitive onboarding and UI
Mainsail is a growth equity investor with offices in Austin and San Francisco. Mainsail’s typical investment is a very high growth SaaS company with between $4-15m in ARR. They like to take majority positions in the companies and help them grow quickly to 2-10x their current size. They prefer bootstrapped or lightly-financed software companies.
Mainsail invested $74m in Rentvine. Based on their strategy, I would guess that the transaction was a majority recap where Rentvine’s existing shareholders take some chips off the table, some capital goes to the balance sheet, and Mainsail ends up with over half of the ownership.
Mainsail is an experienced investor in property management software businesses. In 2017, they invested $36m into ResMan and subsequently led four add-on acquisitions before selling the business in 2021. They also invested in PayLease (a payments platform for property managers) in 2010 before fully exiting in 2017.
FlowMSP acquired by ImageTrend, a Welsh, Carson, Anderson & Stowe platform (Aug 23)
FlowMSP is a software company serving fire departments. The main problem they solve is pre-planning. Before fire incidents, fire departments want to know as much about a building as possible: fire hydrant location, outline of the building, square footage, number of floors, potential hazards, etc. FlowMSP provides both a desktop and mobile app that give fire departments a number of tools to very quickly create fire pre-plans (here’s a very good video example). They also have tools that connect to dispatch systems so that as incidents arise, firefighters can see the data from their pre-plan. FlowMSP has 500 customers and had previously raised a few million of capital from undisclosed investors.
FlowMSP was acquired by ImageTrend. ImageTrend provides software for Emergency Medical Services (EMS), fire departments, hospitals and other healthcare-related organizations. At this point, their product suite is quite vast and covers things like electronic patient care reporting (ePCR) and fire records management system (RMS), both of which are tools to help gather data during emergencies. They also have products that help facilitate bidirectional data transfer between those systems and the hospital systems like their electronic health records (EHR), along with many others.
ImageTrend is owned by Welsh, Carson, Anderson & Stowe, a prominent healthcare and technology investor founded in 1979 with over $27B in AUM. WCAS purchased ImageTrend in January 2023 and FlowMSP is their first add-on acquisition.
AkkenCloud acquired by Avionte Staffing, a Serent Capital platform (Aug 22)
AkkenCloud provides software for staffing and recruiting companies. Their platform combines tools for managing the hiring process, handling back-office tasks (invoicing, accounting, compliance, etc.), and processing payroll, all in one place. This helps staffing agencies operate more efficiently by integrating different aspects of their business into a single system.
They were purchased by Avionte Staffing Software, a similar but larger software company that provides an end-to-end platform for staffing companies. Serent Capital (an active buyer of vertical software businesses) purchased Avionte all the way back in 2014. Since then, Avionte / Serent have made seven add-on acquisitions if you include AkkenCloud. Many of these acquisitions look very similar to Avionte from a product perspective — it’s likely that the rationale for those deals and the AkkenCloud deal is to expand their customer base and, more broadly, add ARR to their platform.
The most unique deal that Avionte / Serent completed came last year when they expanded into vendor management systems (VMS) with the acquisition of SimpleVMS. A VMS, slightly different from an applicant tracking system (ATS), helps businesses manage temporary and contingent workers by coordinating with staffing suppliers, while an ATS focuses directly on recruiting and managing permanent employees in the hiring process for direct hires. The acquisition aimed to connect data between VMS (more of a procurement platform) and the ATS already built into the Avionte platform, eliminating inefficiencies like time delays and duplicate data entry.
Opkey raised $47m from PeakSpan (Aug 22)
Opkey provides a no-code platform for automating software testing. It helps companies test their enterprise software like Oracle, SAP, and Salesforce by offering pre-built test cases and tools that automatically adapt to changes, making testing faster and more efficient.
Software testing is part of the standard application development process and is important to make sure that applications actually work correctly, meet user expectations, and are free of bugs (which helps prevent errors and security vulnerabilities in production). Companies, especially large companies, have complicated workflows and integrations associated with their ERP or CRM systems and spend a lot of time and money testing them to make sure they work for the rest of the organization.
Opkey attempts to stand out in a few ways. First, their platform is no code, so non-engineers (read: cheaper) can build and execute tests on their own. Second, they have existing and powerful integrations with these large ERP systems. It’s quicker to onboard Opkey because of this. Finally, they recently launched some AI tools that should help automatically identify and create test cases.
They raised $47m from PeakSpan Capital, and according to PitchBook, the round was completed at a $78m pre-money / $125m post-money valuation. PeakSpan is an active investor in B2B software companies and has over $1.5B in AUM. They’ve made several other investments in the infrastructure and security subsectors.
