Accela, a provider of civic engagement solutions for government has closed a new funding round on $143.5 million, representing the largest investment in a civic startup to date. The Series E funding was led by ABRY Partners, Landmark Partners, J.P. Morgan Private Equity Limited and Karlani Capital.
Accela will use the funding to make strategic acquisitions, to enhance user experience, and to develop new capabilities for the cloud-based Accela Civic Platform software.
According to IDC Government Insights, approximately $6.5 billion is expected to be spent on civic technologies in 2015, and the company aims to be “well positioned” to take advantage of that spend according to Daniel Kim of Bregal Sagemount, Accela’s original private equity backer.
“We made an original investment of $40 million in 2013, which was also significant for that time,” Kim tells CivSource. Bregal Sagemount runs a $650 million growth equity fund focused on a range of technology investments, civic tech companies like Accela represent one of those verticals. “When we first assessed this vertical, we realized the barriers to entry to have a technology company operate at scale within government services were very high. Accela has already been around the block and knows how to build that business.”
“The marketplace for government SaaS solutions is expanding rapidly as agencies look to increase service levels without significant capital expenditures,” said Maury Blackman, Accela President and CEO.
The latest funding round brings the total capital raised by the company to more than $200 million in the past 15 months, which includes the $40 million growth equity investment led by Bregal Sagemount in October 2013 and a $20 million in debt financing raised from Wells Fargo Capital Finance. Credit Suisse acted as the exclusive private placement agency to the company.
“We are just beginning to tap the potential of civic technology for government,” commented Tyler Wick of ABRY Partners and incoming board member. “We are investing not only in Accela’s differentiated and comprehensive Civic Platform offering, but also in the future impact that these solutions can have on government agencies and the communities they serve.”
“We expect the opportunity cycle to last for a long time as government works through modernization,” Kim adds. “The adoption of cloud services has already been more rapid than we expected initially, and we plan to continue being opportunistically acquisitive.” So far Accela has done six add-on acquisitions, Kim adds that a public offering could also be in the making for the company which would be a significant event for the nascent civic tech industry. “On the surface this government may look like a boring vertical but if you look under the hood there is a significant market opportunity,” Kim said.