The time for initial public offerings (IPOs) is nearly over, yet some deals seem to be sneaking through the gaps with huge payouts attached. Today, Banzai — an engagement marketing business that provides tools to find and interact with potential sales leads, and tools to organise and execute online video events — revealed that it is coming public today, by way of a Spac. At the same time, Banzai would buy Hyros, a startup that focuses on marketing and advertising attribution.
After the transaction, Banzai would have paid $110 million for Hyros, and the merged, publicly traded business claimed it would have an enterprise value of $380 million, based on an equity value of $580 million, less $207 million in cash and $7 million in debt. It is also acquiring $100 million for use in its future endeavours. Banzai International, the merged firm’s new name, will be listed on the Nasdaq.
The principal Spac in this transaction is 7GC & Co Holdings (VII), which touts itself as a $230 million special purpose acquisition company and is a joint venture between the 7GC technological growth fund and Hennessy Capital, both of which are managed by Jack Leeney.
Together, the listing and the Hyros purchase highlight not just the increasing consolidation in the business, but also the possibility that certain companies and investors see to play an active part in that process.
“Yes, we’re raising some capital, but we’re also putting ourselves in the strongest position for M&A,” Banzai CEO Joe Davy told TechCrunch in an email-based interview. This market consolidation in martech that we anticipate over the next 48 months is a significant opportunity for us. We’re planning to equip ourselves with a wheelbarrow, because “when it begins pouring gold, you want a wheelbarrow, not a thimble.”
There has been a lot of movement in marketing technology and in the niche where Banzai operates in that technology in the last few years.
Prior to Covid-19, there was a huge opening for technology to improve how sales and marketing groups make use of the internet and big data. During the pandemic, when face-to-face encounters were out of the question, this trend gained momentum as people realised they had to rely on technological platforms and digital connections to stay in touch. As a result, businesses like Hopin saw a surge in interest in video meeting creation and management, and Banzai followed suit by acquiring video meeting and webinar startup Demio.
However, not all of that joy has lasted. Similarly to how e-commerce has fallen from its lofty epidemic heights, many of the loftiest hopes for the future of online collaboration and productivity have also fallen. Hopin, which was once worth about $8 billion, is one of the most glaring examples of this trend, having recently laid off employees, changed its product focus, and seen other signs of collapse.
Banzai is a far more modest enterprise, emphasising marketing over video production and generally adopting a distinctive strategy.
According to PitchBook statistics, as of now the firm has over 7,000 clients and has already received around $120 million from investors including Tribe Capital, Growth Technology Partners, and Gaingels. Included in that total is $100 million secured from a company called Global Emerging Markets earlier this year, and today’s announcement confirms their public listing. Banzai boasts an ARR of $22.1 million and a gross profit of $16.9 million for the 12 months ending September 30, 2022. This is an annual growth rate of 85%. Banzai lost $8.5 million in the same time period, therefore the company is still not profitable.
“We see ourselves as a sales and marketing platform first, and video platform second,” Davy said. “So, we’re more focused on what are the real day-to-day needs of marketers and sales teams and how can we put those things together in a single package that’s really simple and accessible for our customers.”
He also noted that, similar to how HubSpot and Marketo became industry leaders by developing email-centric marketing tools, the company is doing the same for video. He also noted that most video solutions utilised by marketing and sales departments were not tailored to their unique requirements. “We are expanding our video marketing capabilities by incorporating analytics, automation, audience development, and other tools essential to the success of sales and marketing teams,” says the company.
While Banzai could have certainly obtained the same amount of money from private investors, becoming public places it on a different scale. That’s probably also what prompted the business to go public.
“The days of easy money with zero accountability in VC are behind us at least for the foreseeable future. And this is overall a really good thing,” said Davy. “Doing this merger with VII solves several things in one fell swoop. It adds some cash to our balance sheet, gives us a public currency, and allows us to acquire Hyros – which we believe will all be great for our customers and our business long term.”
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