Engage3, a Davis-based developer of analytics software for retail companies, has raised $35 million in a round of growth funding led by a new investor.
The new round is led by Marina Del Rey-based Arrowroot Capital, a growth equity firm specializing in business-to-business software-as-a-service companies.
Engage3 will use the funding to accelerate the growth of its price optimization software into more segments of retail and to expand into over 30 countries, Engage3 CEO Edris Bemanian told the Business Journal.
Engage3 last raised capital in 2019, with a $12 million round of funding.
With its 2019 funding round, the company was working toward profitability, and “we demonstrated we could get there,” Bemanian said. But Engage3 later decided to change its focus to grow into more sectors and more countries, he said.
Other investors in the $35 million round include Sweetwater Private Equity of Encinitas and existing investors including Black Diamond Ventures of Glendale.
“This is the big one for us. They are professional growth investors,” Bemanian said.
Engage3 has known Arrowroot since 2017, even though the private equity firm didn’t invest then, Bemanian said. “We were too small for them at the time.”
Arrowroot will add two directors to Engage3’s board of directors, including Matthew Safaii, Arrowroot founder and managing partner, and Doug Bewsher, an executive in residence at the firm. Bewsher is a former chief marketing officer of salesforce.com inc. (NYSE: CRM) and of Skype.
“We have been tracking Engage3 for almost five years and have been very impressed by how well they have executed during that time,” said Safaii, in a news release. “The company’s tremendous year-over-year growth rate, the criticality of the business problems their solutions address, and the massive market opportunity ahead of them led to this being an easy investment decision for us.”
Engage3 was ranked No. 13 on the Sacramento Business Journal’s Fastest Growing Companies list in August, with $11.1 million in revenue in 2020, up 100% over three years.
The new money will be used to develop more products and software, as well as to build sales and marketing efforts offshore, Bemanian said. Engage3’s customers are primarily in the U.S. and Canada. The company has had some international customers, but they have often been gained by happenstance. With the new funding, Engage3 will set up teams to intentionally pursue international customers, Bemanian said. The funding is also expected to enable Engage3 to double its staff, currently 130 employees, over the next two years.
Asked about an eventual exit, Bemanian said “it’s too early to tell. There is still so much growing to do, globally and into more markets.”
Other existing Engage3 investors include The March Fund, Pereg Ventures, Folsom-based Moneta Ventures, Wells Fargo, NewRoad Capital Partners, Swift Communications, Sacramento-based publishing company McClatchy, and angel investors including Dale Carlsen, founder of the Sleep Train mattress store chain.
In addition to its headquarters in Davis, Engage3 has teams in Phoenix and Atlanta.
