Banzai, a Seattle marketing software startup, announced Thursday that it will go public after it agreed to merge with a special-purpose acquisition company. The company also said that it will pay $110 million to acquire marketing optimization startup Hyros after the SPAC deal closes.
Founded in 2016 by former Avalara employees, Banzai originally started as an on-demand inside sales and marketing platform. It shifted to help companies drive registrations to events. Then it pivoted again as the pandemic hit, focusing on its virtual events marketing solution.
The startup, which has 94 employees, now describes its product as “an end-to-end video engagement solution that provides a fast, intuitive and powerful platform of marketing tools that create more intent-driven videos, webinars, virtual events, and other digital marketing campaigns.”
The SPAC is led by 7GC Holdings, headed up by Jack Leeney and CFO Christopher Walsh. 7GC Holdings is a joint venture with Berlin-based Hennessy Capital, and its management team was involved in helping Seattle company Porch go public via SPAC.
“We found a great partner in 7GC Holdings team,” Banzai CEO and founder Joe Davy told GeekWire. “We love their experience in this space…they’ve been doing SPACs since before it was cool, so we felt they would be great long-term partners.”
Special purpose acquisition companies (SPACs) re-emerged in a big way during the pandemic’s low interest rate environment, as capital flowed to newly formed entities and entrepreneurs used SPACs to more quickly enter the public markets.
But the performance of post-merger SPACs has steadily dropped, particularly since January amid the larger market downturn. More than 55 SPAC transactions have been called off this year and the traditional IPO market has also softened. 7GC was set to take Vice Media public in August 2021, but the two parties reportedly scrapped those plans.
Seattle businesses including Porch, Nautilus Biotechnology, Rover and Leafly have all gone public via SPAC within the last two years. But these companies, which vary widely in their respective industries, have seen their stock price drop by at least 50% from all-time highs.
Following the merger between Banzai and 7GC, the combined company will have a post-deal enterprise value of $380 million. The company raised an additional $100 million through an equity facility from GEM.
The combined company will be called Banzai International and will trade on the Nasdaq Capital Market.
“We want Banzai to be in the best position in the coming years,” Davy said. “This will put more cash on our balance sheet. It will also put us in a better position to buy great companies when the opportunity arises.”
An investor presentation for the deal shows that Banzai posted a net loss of $8.5 million, for the 12 months ended Sept. 30, 2022, with annual recurring revenue of $22.1 million. The startup serves more than 7,200 customers in 28 countries.
Banzai did not disclose how much total funding it has raised to date. The company said it raised a total of $21.2 million when it raised $15 million in venture debt financing in March 2021.
Banzai competes with London-based virtual events startup Hopin, which raised $400 million last year in a deal valued at $7.75 billion. Other competitors include San Francisco-based Hubilo, which raised $125 million last year.