Association management and fundraising software firm Advanced Solutions International Inc. has big plans to grow from $40 million in annual revenue to $75 million in the next four years.
The dramatic expansion, partly through organic growth and in part through what CEO and co-founder Bob Alves envisions to be a series of acquisitions, is fueled by a new $35 million funding round the company closed recently with Connecticut-based Brookside Equity Partners.
“There are a lot of companies in this space that have just run out of steam. These are lifestyle companies and they are ready to sell. And we will be happy to buy them, too, because we can monetize it,” Alves said.
That is because the Alexandria company has spent the last few years shifting from a traditional software sales model to a cloud-based software service that charges recurring fees for its software, and adding on capabilities allows the firm to more easily keep older customers and entice new ones, Alves said.
He said Brookside could end up investing up to $100 million over time to help the company grow over the long term.
The aggressive growth plan is just the latest chapter for the long-running company, first founded in 1991 and one of the original software firms in the association and nonprofit space built on the Windows operating platform. About four years ago, the company raised roughly $28 million from New York private equity firm Bregal Sagemount to transition to a cloud-based firm and made an acquisition with an additional $18 million investment. The new round in part bought out Bregal Sagemount.
ASI ended up buying Innovative Software Solutions Inc. in 2017 but then sold it in 2019 at a substantial profit, which Alves said translated to a 40% internal rate of return on its investment.
That deal boosted ASI’s own profitability and allowed it to raise the additional funding to buy out earlier private equity investors on better terms, Alves said. The company is currently the No. 1 management software for associations and nonprofits in the U.S. and Canada, and among the top in other English speaking countries, he added.
“We have a couple of acquisitions we are in the process of that Brookside and this money we just got will help us complete,” Alves said.
The deal also includes Brookside Equity Managing Director Don Hawks joining the board of the company. Hawks is the chairman of the board of publicly traded insurance firm SelectQuote Insurance Services Inc.
ASI has about 187 employees currently, with about 60 in Austin, Texas, and about 40 — including Alves — in the Greater Washington area, along with offices in Australia, London and Toronto. The company also works with 80 business partners that sell its service.
While the spread of Covid-19 has hit some industries hard, Alves said ASI's sales were already 40% more than where they were at the same time last year, and it helps that its own clients tend to be trade associations and others less focused on events and more focused on memberships. And its cloud-based software is more attractive to firms that now have employees working remotely, he added.
“I think at the end of the day, we are basically in a business that transcends the Covid problems. The reason our business is holding up is that we are part of the solution, not part of the problem,” Alves said.
Covid did throw a wrench in ASI's ability to raise that new round of funding. While it had been talking with many companies prior to Covid, the spread of the pandemic and the resulting initial collapse of the stock market earlier in February and March saw those suitors pull out of talks.
“We were looking at the broad market trying to find the best deal and talking to as many people as we could. They were promising the moon. But as soon as the market changed 80% to 90% of those people disappeared off the face of the earth."
But eventually the company was connected to Brookside by earlier interested investors. Brookside, which is a family office, had fewer rules and restrictions about where it made investments — and that meant it could strike a deal that was good for the firm, Alves said.
“They were able to work with us and look at the opportunity and decide if they were willing to invest without playing any games," he said. "We weren’t going to do the deal by taking a haircut because of Covid."
One thing Alves does not plan to do is sell the company — at least not anytime soon.
“We would rather have the business and keep the business,” Alves said, adding that he and the other founders received payouts in a previous round of financing. “We have a stock-option plan, so if we were to sell it we would sell it at a very attractive price."
