Holdings company GTY Technologies acquired DemandStar, a Seattle startup that offers a public sector bidding marketplace.
“We’ve had quite a bit of inbound interest as the tech sector as a whole has been consolidating, so we had a choice of partners,” DemandStar President and CEO Ben Vaught told GeekWire. “We chose Bonfire and GTY Technologies because of how great they are with their customers and the amount of customer value I believed we could create together moving forward.”
DemandStar gives 1,300 agencies a place to post request for proposals (RFP). Vendors can then propose bids on those requests. The startup makes money by selling annual subscriptions to businesses for notifications of government contracting opportunities. It was previously owned by Seattle-based Onvia, which sold to Deltek, a division of Roper Technologies, in 2017.
Vaught took out a loan on his house to buy an existing base of customers and legacy software from Deltek in late 2018, and raised a small angel round before nabbing a $2 million seed round in 2020 led by Version One Ventures.
The pandemic was a “key driver of growth” for DemandStar because it accelerated the trend toward digitization of government services, Vaught said. Government spending is counter-cyclical, he added, meaning the slowdown in the broader economy is not affecting the startup’s business.
DemandStar will be joining GTY’s Bonfire unit, which sells sourcing and procurement software to more than 650 government agencies across North America. Bonfire and DemandStar will eventually merge, offering a “complete portfolio of cloud-based procurement solutions to both state and local public agencies of any size or requirement,” according to a news release.
The deal took about six months to complete, and terms were not disclosed. Following the acquisition, DemandStar will keep its branding. The startup has 15 employees, and all were offered a position at GTY.
“It’s all hands on deck for this rapidly digitizing industry right now, and the quality of the DemandStar team was a key piece of the acquisition,” Vaught said.
GTY is a portfolio company of GI Partners, a private investment firm with offices in San Francisco, New York, Dallas, Chicago, Greenwich, Conn., Scottsdale, Ariz., and London. Founded in 2001, the firm has $35 billion worth of assets under management.
DemandStar raised a total of $2.8 million from investors. Backers include Version One Ventures, Forefront Venture Partners and Advance Venture Partners.
Boris Wertz, a partner at Version One Ventures, led the seed round in DemandStar in Summer 2020. The deal came together without a single in-person meeting given the ongoing COVID-19 crisis at the time.
“Now that we’ve sold, he’s now completed the entire investment cycle without us ever having met face to face,” Vaught said.
