Marketing Firm Zeta Global Turns Heads With $140M Funding Round

Cloud marketing automation firm Zeta Global on Thursday announced that it has raised US$140 million in its largest ever round of financing.

Former Apple CEO John Sculley and David Steinberg cofounded the company in 2007. GPI Capital led the Series F financing. Other investors include funds sponsored by Franklin Square Capital Partners and sub-advised by GSO Capital Partners, the credit division of Blackstone.

The new round of financing includes $115 million in equity and $25 million in debt. Zeta will use the funds to advance its growth plan through strategic acquisitions. It also plans to use some of the new funds to invest in new technologies, as well as for operations, and for sales and marketing efforts.

The financing round marks a "watershed moment" for Zeta Global, and the company is on track to reach all of its internal goals, said Steinberg, who is the company's CEO.

"We are hitting every milestone in our evolution and will continue to capitalize on acquisitions that will enhance and extend our marketing cloud so that we can deliver even more to our blue chip client base," he added.

GPI Capital Chief Investment Officer Bill Royan, who will join the Zeta Global board of directors after the deal closes, said he was "bullish on the shift towards data-driven digital marketing."

Laying the Groundwork

Zeta Global, which last year changed its name from "Zeta Interactive," recently has made some key additions to its management team. In March, it named Donald Steele, the former managing director of North American sales at Epsilon, as its first chief revenue officer. In January, it announced that Jarrod Yahes, former CFO of Jackson Hewitt Tax Service, would be its new CFO.

Zeta Global has expanded through a series of acquisitions to become competitive in the CRM space against incumbents like Salesforce, IBM, Oracle and others.

"The pace of innovation in cloud marketing is fast, and there is no clear winner in that space," said Rebecca Wettemann, vice president of research at Nucleus Research.

"We saw a peak of acquisitions a few years ago, and it's likely to happen again -- particularly with broader platform players that can grab innovation from the niches," she told CRM Buyer.

Zeta grew by 50 percent in 2016. As it reportedly generated $200 million in revenue in 2015, that would put its 2016 revenue at about $300 million.

Zeta last summer raised $45 million from business development companies managed by FS Investments and sub-advised by GSO Capital Partners, Cerebus PNC Senior Loan Fund and PNC Bank.

Around the same time, Zeta announced its $50 million deal to acquire Acxiom, which provides marketing automation software for enterprise firms.

IPO Potential

Zeta Global reportedly has been watching the markets closely with an initial public offering in mind.

The new round of funding and Zeta's growing base of customers show there is "still plenty of demand for comprehensive, multichannel marketing solutions" from a variety of sources, said Jeffrey Kaplan, managing director of ThinkStrategies.

"The company's rapidly growing installed base of brand-name customers clearly indicates that it is offering unique capabilities compared to Salesforce.com and other CRM providers," he told CRM Buyer.

The new round of funding shows investor confidence in the company's plans to make additional acquisitions or launch an IPO, Kaplan suggested.

"There are a lot of 'big data' vendors, but Zeta augments data sets with context and improves Data as a Service marketing," said R 'Ray' Wang, principal analyst at Constellation Research.

"They will keep buying distressed companies," he told CRM Buyer, "and integrating and aggregating data sets to improve marketing outreach."

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.