Key Microsoft SaaS Partner AvePoint Plans $2 Billion IPO via SPAC

Microsoft SaaS partner AvePoint is planning an IPO by selling itself to Apex Technology Acquisition Corp. Apex, a special-purpose acquisition company (SPAC), will acquire AvePoint in a deal that values the company at nearly $2 billion.

Veteran technology investors Jeff Epstein, operating partner at Bessemer Venture Partners, and Brad Koenig, co-CEO at Apex, formed the SPAC last year. SPACs are companies formed specially with the intent of acquiring a private company, typically ones poised for growth.

SPACs, often called “blank checks,” allow companies to circumvent the traditional registration processes and investor road shows associated with IPOs. SPACs have offered companies an alternate route to IPOs for decades. But in 2020, a record number of companies used SPACs to go public. Among 370 IPOs in 2020 so far, 198 companies went public via SPACs, according to SPAC Analytics. That translates to roughly 54% of this year’s IPO activity, compared to 2019 when 28% of the IPOs were SPACs.

AvePoint’s Tianyi Jiang

“It’s much faster to go the SPAC route,” AvePoint co-founder and CEO Tianyi Jiang told Channel Futures. “This way, my team and I can go back and focus on running our business. With the traditional IPO, it would take much longer and create much more of a distraction.”

Jiang will continue to lead AvePoint and co-founder Kai Gong will become executive chairman.

Breakdown of AvePoint’s $2 Billion Valuation

Apex shares started trading on the Nasdaq in Sept. 2019. Once the deal closes next year, Apex will become AvePoint, whose shares will continue trading with the AVPT symbol. The $2 billion valuation is based on $352 million from Apex, and $140 million from PIPE investors. The remainder comes from $1.4 billion in equity rollover and $64 million on the balance sheet.

Apex shareholders will own almost 18% of the company, existing AvePoint shareholders will retain 72% and PIPE investors will hold 7%. Apex founders will hold the remaining 3.3%. Epstein will join AvePoint’s new board as a director and Koenig will be an observer on the board.

Prior to Bessemer, Epstein held various CFO roles at major tech companies including Oracle, DoubleClick and Nielsen. He has also served on 20 boards during the past 8 years. Koenig years ago was global head of technology at Goldman Sachs, where he led more than 200 IPOs. Companies Koenig advised include Microsoft, Dell, Symantec, Oracle, SAP and eBay.

“We believe we are the ideal partner for AvePoint due to our many relationships in the capital markets, boardrooms and executive offices of AvePoint’s, customers and prospects, said Epstein, during a webcast Monday announcing the deal. “Our knowledge of enterprise software and our experience with some of the most effective and efficient leadership teams in the world.”

Roots in Microsoft SharePoint Migration and Management

AvePoint is a Microsoft SaaS partner that offers governance, management and data protection solutions for SharePoint, Office 365 and Teams. Founded in 2001, AvePoint is among the most visible ISVs in the SharePoint, Office 365 and Teams partner ecosystems. AvePoint started out offering SharePoint migration, management and governance software and remains quote influential in that segment.

But as SharePoint shifted to the cloud becoming a key component of Office 365, AvePoint expanded its solutions and now boasts a broad portfolio of SaaS tools. In addition to riding the Office 365 wave, the growth of Microsoft Teams has accelerated AvePoint’s growth. AvePoint estimates 2020 revenues of …

… $148 billion will be 26% higher than last year’s $117 million.

CollabTalk’s Christian Buckley

“AvePoint was very smart was during the early years of Microsoft’s push toward the software-as-a-service model,” said Christian Buckley, whose CollabTalk provides research and technical marketing services. “They recognized this shift toward the cloud early on, and while it would take years for most ISV partners to recoup any of these investments, that early insight and strategy is paying off immensely for AvePoint today.”

During its 19-year history, AvePoint’s customers have consisted of the largest enterprises, which comprised the majority of SharePoint shops. As Microsoft built Office 365 and OneDrive for Business on the core SharePoint repository and data store, AvePoint’s market expanded. AvePoint now offers data protection and governance for Microsoft Teams and Office 365. As AvePoint shifted to SaaS, it paved the way for last year’s expansion into small and midsize enterprises.

“We realized, ‘Hey, just because you’re a 50-person law firm doesn’t mean your data is worth less to you than American Express or Citibank,” Jiang said. “That’s now our customer.”

Meanwhile, the company started offering SMBs monthly subscriptions.

Expanding from Direct Sales to Channel

Because of its large enterprise heritage, more than 70% of AvePoint’s customers buy directly from the company. AvePoint’s enterprise customers sign multiyear contracts, typically from one to three years. With last year’s foray into the SMB market, AvePoint started offering monthly subscriptions through MSPs.

“Wouldn’t you know it, the logo retention rate last year is 99% and this year even during COVID-19, it is 95%,” Jiang said.

Among the key reasons AvePoint wanted to go public was to expand its reach into smaller companies.

“The best way to capture that market share is channel; it’s scaling through indirect sales,” Jiang said during Monday’s webcast. “SMB is 100% channel to distribution partners and selling to MSPs.”

AvePoint kicked off that effort last year, with the launch of Elements, a platform that lets MSPs offer migration, backup and management of Office 365 and Azure tenants.

“But obviously, to go after the SMB, to play in the same playground as Veeam, Datto and companies like that, we really need to step it up,” Jiang said.

Buckley said AvePoint is making the right moves.

“They have been making solid inroads into the MSP space, and now find themselves in a dominant position within the M365 ecosystem,” he said. “In some ways, the cloud ecosystem is more crowded with smaller, purpose-built apps and narrowly focused ISV solutions, but few companies have the depth of expertise and comprehensive offerings to compete with AvePoint in the Microsoft 365 cloud ecosystem.”