The IPO window is completely closed at the moment, but a few things still seem to be slipping through the cracks and involving huge amounts of money. Today, Banzai, an engagement marketing startup that provides tools to connect with prospects to create and host online video events, went public through PSPC. In addition, Banzai acquired Hyros, a startup specializing in advertising and marketing topics.
Banzai is paying $110 million to purchase Hyro, and the combined public company said it will value the project at $380 million -- with a total value of $580 million, $207 million in cash and $7 million post-deal debt. It raises $100 million to support future operations. The combined company will be listed on NASDAQ (specifically the Capital Markets Division) as Banzai International.
The SPAC leading the deal is called 7GC & Co Holdings -- a partnership between tech growth fund 7GC and Hennessy Capital led by Jack Linney -- which describes itself as a $230 million special-purpose buyout company that negotiated under VII.
These two transactions - the listing and acquisition of Hyro - underscore not only the ongoing consolidation of the market, but also the opportunity for some startups and investors to play an active role in this process.
"Yes, we raise funds, but we're doing our best to position ourselves for mergers and acquisitions," Banzai CEO Joe Diffie said in an email interview with TechCrunch. “We expect a lot of martech consolidation over the next 48 months and this is a huge opportunity for us. When the gold starts raining, you want a wheelbarrow, not a suitcase, and we try to get in a wheelchair.”
Marketing technology and the specific area in which Banzai operates has seen a lot of activity over the last few years.
In the run-up to COVID-19, there was already a huge opportunity for technology to help sales and marketing teams use the internet and big data to do their jobs better. It really started during the pandemic, when face-to-face meetings became impossible and reliance on technology platforms and digital communication was essentially the only way forward. That gave a big boost to companies like Hopin to create and better manage video meetings, and Banzai jumped on the bandwagon too, buying a startup called Demio to bring video meetings and webinars to its platform. -Form.
However, none of this abundance was saved. Just as e-commerce has descended from its glittering heights of the epidemic, so have high expectations for all your virtual collaboration and productivity tools. Perhaps one of the biggest examples of this is Hobbin itself, which has seen layoffs, product focus, and other examples of downsizing after being valued at around $8 billion at its peak.
Banzai is a much smaller company, which shows that it's more focused on marketing than video and takes a slightly different approach in general.
Today, the company has nearly 7,000 clients and has raised nearly $120 million for Pitchbook Data from investors including Tribe Capital, Growth Technology Partners and Gainzel. That sum includes $100 million arranged earlier this year by a company called Global Emerging Markets, according to the IPO confirmed today. Specifically, Banzai reported that it had gross profit of $16.9 million for the 12 months ended September 30, 2022, a year-over-year growth rate of 85% over the period, and an ARR of $22.1 million . However, Banzai remained largely unprofitable, posting a net loss of $8.5 million over the same period.
Banzai CEO Joe Diffie notes that video is only part of what they offer, and the idea here is to create a comprehensive suite of marketing and sales tools.
"We see ourselves as a sales and marketing platform first and a video platform second," says Davey package together for our customers.”
He added that companies like HubSpot and Marketo have made their mark by creating static marketing features in email and are doing the same with video. He adds that most video products used by sales and marketing teams are generic and not tailored to their needs. "We're building marketing capabilities around video, adding data, automation, audience generation, and other things that [sales and marketing teams] need to be successful."
Raising funds as a public company puts Banzai on a different scale than what it can raise from private investors, especially right now. This will likely push the company to go public.
"The days of easy money with no venture capital liability are behind us, at least for the foreseeable future," Davey said. "And that's a very good thing overall." “This merger with VII solves several problems at once. This adds money to our balance sheet, gives us public currency and allows us to buy Hyros - which we think will be great for our customers and our business over the long term. "