Though private equity investments often involve a quick string of mergers, acquisitions and sale to other companies, this one might be a little different. That's because Serent Capital, the firm making the investment, called the money "growth" capital. In private equity, growth capital typically implies a minority stake.
Still, the move suggests expansion for Pondera. Where venture capitalists often acquire minority stakes in companies and offer guidance to the companies as they grow, private equity investment often involves a more hands-on approach meant to quickly increase the business value of a company.
One recent example in the gov tech field is Granicus and GovDelivery. Vista Equity acquired both companies in the latter half of 2016 and merged them into a single entity shortly thereafter.
"Serent's industry expertise and business-building resources will accelerate our growth, enhance our products and deliver even greater value to our clients in the coming years," Pondera Chief Executive Officer Jon Coss said in a press release.
Serent Capital is a nine-year-old San Francisco firm with seven exits under its belt. The equity firm’s past investments focus on technology, including niches that overlap or skirt the public sector such as health care, education and mortgages.
Data was available on Serent’s website and Crunchbase for four of the companies that Serent has acquired and then sold off. Serent held onto those companies an average of three years.
“We have been exploring investment opportunities in state & local government for some time and feel privileged to partner with Jon [Coss] and the Pondera team,” Serent Partner David Kennedy said in the statement.
Pondera works with government programs to find fraud, waste and abuse in programs such as unemployment insurance, Medicaid and nutritional assistance. Its solutions run on machine learning to red-flag cases that merit special attention from government officials.
Serent didn't disclose the terms of the investment, though the Sacramento Business Journal reported that the deal was in the tens of millions of dollars.
