Knoxville, Tennessee-based Ministry Brands LLC is a family of software companies providing solutions to faith-based organizations across North America. The “roll-up” company was built through a series of acquisitions and funded through a series of backers, demonstrating the value that private equity investors find through consolidating fragmented SaaS verticals in a short period of time.
The software platform for the religion vertical was recently valued at $1.5 billion after an investment from Insight Venture Partners in November 2016. San Francisco-based Genstar Capital, the company’s former lead investor since November 2015, retained a significant minority stake in the company, while former minority investor Providence Equity exited on the close of the deal.
The five-year-old startup led by Chief Executive Officer and co-founder Ross Croley and Chief Operating Officer Brad Hill provides cloud-based content management and online payments software and services to faith-based organizations and educational institutions. The firm was founded in 2012, when founders Ross Croley and Ben Sealey met at the Farragut Christian Church in Knoxville. Ben had recently launched an online church donation platform called SimpleGive with Jason Butler. Croley and Sealey bonded over their shared passions for technology, entrepreneurship, family and church, and together with Butler formed Ministry Brands, a more comprehensive solution for faith-based organizations.
“Looking at church technology in-depth, I felt that providers were highly fragmented, meaning that the church was receiving multiple technology platforms from multiple vendors. For example, a church would have one vendor for a website, one for online giving, another for membership management, and yet another platform for accounting functions," explained Croley.
The tech unicorn lists over 55,000 churches in North America as customers, which use its suite of services including background checks, church management software, financial accounting software, messaging, coaching programs, mobile apps, and more. Ministry Brands says that it takes into account that there is “no one size fits-all solution for the different sizes, service needs and backgrounds” for its customers, and offers over 38 unique software platforms.
“Taking it a step further meant that, instead of having multiple platforms and touch points at the church level, we could create a partnership where like-minded Christian businesses could partner with one another to create better technology for the Church that fully integrated all of the products. We also believe that these tools should be available to all churches and at affordable prices,” said Croley.
In line with the company’s mission, which goes far beyond just a bottom line, Insight and Ministry formed a new foundation which allots part of the firm’s profits to philanthropic grants for its church and ministry partners.
The private equity-backed company projects 2017 earnings before interest, taxes, depreciation and amortization of $100 million.
The company has acquired a number of its rivals, including long-time church management system provider Shelby Systems. After Genstar invested in Ministry Brands, the company bought out the faith division of Active Network LLC from Vista Equity Partners. The acquisition added over 4,500 churches to Ministry Brand’s portfolio, according to press release.
Ministry Brands is a testament to the high-growth vertical software category, the largest growing in the space at about $122 billion, according to research firm Gartner. Momentum is expected to continue as more enterprises and organizations demand products tailored to their industry-specific needs.
Private equity investors have been particularly active in deals with software companies that cater to associations and nonprofit organizations, due to the highly fragmented state of such industries. Last year, Brigal Sagemount made a minority investment in Advanced Solutions International Inc., a company which provides cloud-based software to associations and nonprofits that specifically serve public media, ministries, faith-based organizations and regulatory bodies. In the same month, Battery Ventures invested in Clubessential LLC, a web and accounting software provider for yacht clubs and golf resorts which hopes to expand its member service capabilities to YMCAs, churches, nonprofits and libraries.