News Analysis: Avangate Acquired By Francisco Partners For Matrix Commerce Capabilities

Digital Distribution Leader Gains West Coast VC Backing

On October 7th, 2013, private equity firm, Francisco Partners acquired Avangate, a leader in digital commerce and subscription billing.  Avangate serves over 3,000 customers across more than 100 countries.  The deal terms were not publicly disclosed and was led by My Le Nguyen.

Constellation sees this development significant for buyers and prospects for a few reasons:

  • Gains critical west coast VC backing. The acquisition of Francisco Partners supposedly includes a buy-out of existing investors.  My Le Ngueyn of Francisco Partners is also an investor and board member at GXS, EF Johnson Technologies, and WatchGuard Technologies.

    Point of View (POV):
    Avangate frees itself from the shackles of non-west coast VC’s who often under invest and lack the key networks of Silicon Valley based VC’s.  My Le is a rising star at Francisco and will help Avangate invest in future areas of growth.  The buy out of existing partners is critical to Avangate’s success trajectory.
  • Invest in key customer facing and product areas. Avangate provides what Constellation terms as a matrix commerce platform.  The product delivers a unfied online eCommerce, subscription billing, global payments, and reseller & affiliate management offering.

    Point of View (POV):
    Constellation expects the management team to invest deeper in product development, sales, customer service, and marketing.  Recent customer successes requires Avangate to adequately support its growing vendor customer base with more engineering support, professional services, and product management resources.
  • Expand geographically and through mergers. New investment round provides opportunities to grow in new digital commerce hot spots as well as fund additional technology and customer base acquisitions.

    Point of View (POV):
    Many opportunities exist in areas with high mobile penetration and digital commerce  Avangate could expand its presence more into India, Indonesia, and Latin America.  .

The Bottom Line: Matrix Commerce Platforms Continue To Gain Traction With B2B and B2C Customers

Avangate was founded in 2006 after the first Internet bubble.  Many lessons learned from the first bubble now apply to matrix commerce as the shift to cloud, digital distribution, and the rise of mobility drive brands and publishers to explore integrated and cost effective approaches.  When commerce revolves around the buyer, channels, demand signals, supply chains, payment options, enablers, and big data converge into what Constellation describes as matrix commerce. Matrix Commerce spans across disciplines as people, process, and technologies continue to transform today’s commerce models.  Matrix commerce addresses the fusing of demand signals and supply chains.  Customers now realize the need to move to unified solutions instead of integrating a patch work of point solutions.  Consequently, solutions such as Avangate are transforming how digital goods and software publishers distribute, expand, service, and bill for their IP.

Your POV.

Are you looking at new digital distribution options? Are you an Avangate customer?  What are your thoughts on the investment by Francisco Partners?  Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) com.

Please let us know if you need help with your Matrix Commerce and Digital Business transformation efforts.  Here’s how we can assist:

  • Assessing matrix commerce readiness
  • Developing your digital business strategy
  • Vendor selection
  • Implementation partner selection
  • Connecting with other pioneers
  • Sharing best practices
  • Designing a next gen apps strategy
  • Providing contract negotiations and software licensing support
  • Demystifying software licensing

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R “Ray” Wang (pronounced WAHNG) is the Principal Analyst, Founder, and Chairman of Silicon Valley based Constellation Research, Inc. He’s the author of the popular business strategy and technology blog “A Software Insider’s Point of View”. Wang has held executive roles in product, marketing, strategy, and consulting at institutions such as Forrester Research, Oracle, PeopleSoft, Deloitte, Ernst & Young, and Johns Hopkins Hospital. His best selling book, Disrupting Digital Business, published by Harvard Business Review Press provides insights on why 52% of the Fortune 500 have been merged, acquired, gone bankrupt, or fallen off the list since 2000. Wang is a prominent dynamic keynote speaker, research analyst, and industry commentator working with clients to transform their business models using exponential technologies. He’s spoken around the world at almost every tech related conference including keynotes for tens of thousands of people and intimate executive settings such as Davos. Ray’s clients include a majority of the Fortune 500 and Global 200. Ray is well quoted in media outlets such as the Wall Street Journal, FoxBusiness, CNBC, Bloomberg, CNN, CGTN, Tech Crunch, Business Week, and Fortune. He has thrice won the prestigious Institute of Industry Analyst Relations (IIAR) Analyst of the Year Award and has repeatedly been in the #1 slot in the AR Power 100 list for over 10 years. Ray resides in Silicon Valley when not traveling 500,000 miles a year in the air.