Private Equity Money Fuels Acquisitions of Cybersecurity Firm Jungle Disk
San Antonio tech company Jungle Disk has acquired three product groups to add to its line of cybersecurity offerings. The deal is the latest splash made by a growing agent in San Antonio’s economic development: private equity funds eager to buy tech groups from afar and relocate them to the city’s emerging tech district.
Jungle Disk, a San Antonio-based small business cybersecurity provider, has acquired three product groups – KeepItSafe, LiveVault and OffsiteDataSync – from J2 Global in a leveraged buyout backed by a new private equity firm local, Dry Line Partners. Support also came from private equity firm Porthcawl Holdings, which bought Jungle Disk from Rackspace in 2016. Financial terms of the deal were not disclosed.
Michael Girdley, one of Dry Line’s partners, said the acquisitions made Jungle Disk the second-largest privately-held tech company in San Antonio by revenue. (Pathwire, an email service provider, is generally considered the most important.)
The deal is expected to be a major development for the city’s tech scene. David Heard, chairman of the tech industry advocacy group Tech Bloc, said it will take time for people to “fully appreciate the weight and size of the three assets that are being purchased and what the size of the new business “.
The three product groups acquired by Jungle Disk are headquartered in Los Angeles. Teams from those groups are currently there and outside of Boston.
Jungle Disk was previously based in the Rand Building downtown, but abandoned its office during the pandemic. Girdley said the company will likely move to new offices in the city’s tech district.
Girdley says the assets acquired are “much bigger” than Jungle Disk, although he declined to elaborate more.
The acquisitions aim to make Jungle Disk more competitive for larger customers, by expanding its reach in the market. The acquired companies provide services to thousands of medium and large clients located around the world and grouped in industries such as healthcare, information technology and financial services.
Jungle Disk, which is owned by Porthcawl Holdings and whose CEO is a partner of Dry Line, provides a suite of cybersecurity services such as data backups and password management, among others, to protect data against system failures, human error and cyber attacks.
The deal marks the first investment for Dry Line, which is based in San Antonio and Austin. It plans to acquire more tech companies in the future, the statement said.
While billion dollar private equity funds like Blackstone and Apollo typically grab the headlines, smaller funds have proliferated in recent years. A 2020 McKinsey report found that the number of privately funded companies in the United States has grown from 2,000 to almost 8,000 over the past 20 years.
In San Antonio, tech-focused private equity funds have become a small generator of economic development – alongside more typical methods like recruiting businesses or growing home-based businesses – by relocating businesses to the region. city.
“We’re improving our private equity game,” said Heard, who noted that this type of fund has been around for years in metropolitan areas with high-profile tech scenes. “It’s a growing small cottage industry in San Antonio, and it has an impact on economic development. “
The tech companies that these funds relocate are normally hard to find, Heard said, because San Antonio has not “historically been the most obvious choice.” (Heard’s organization aims to change that.)
For a few examples: Scaleworks, founded in 2015 as what Heard said was the first private equity fund of this model, relocated social media marketing platform Tint from San Francisco to the city in 2018. Dura Holdings , also founded by Girdley, relocated Moki Mobility, a phone software company that moved its headquarters from Utah to the Tech District after it acquired in 2019.
Jungle Disk CEO Bret Piatt said he and others at the tech company were thrilled.
“We strongly believe that adding these companies to Jungle Disk will dramatically improve the customer experience and provide employees and investors with critical mass and greater resources for future growth,” he said in a press release prepared.