This morning, Frederic reported that Intuit has acquired TSheets, a time-tracking service, for $340 million. Thatâs one of the highest prices that Intuit has ever paid for an acquisition, roughly equal to the cost of the companyâs acquisition of Mint Bills / Check in 2014, and slightly smaller than the acquisition of Demandforce in 2012 for $423 million (which Intuit has since divested in).
Despite its size, the acquisition appears to be fairly standard for Intuit, fitting in well with their small business-focused SaaS strategy. However, what caught my eye is that TSheets is based in Eagle, Idaho, just outside of Boise, and even more importantly, Intuit is going to convert the TSheets headquarters into a new product and engineering office as part of the transaction.
That news might be sweet relief for the 260 employees who work at TSheets, but it is also a strong sign of the ârise of the restâ that we have chronicled for a long time here on TechCrunch.
Venture capitalists like Steve Case have made a strong case for investing outside of major urban areas. Case pushed hard on this theme at TechCrunch Disrupt New York this year, calling for venture investors to look wider for great founders and startups. And as Catherine noted yesterday, Case has followed up that passion with an announcement that he has raised a special $150 million seed fund to exclusively invest in startups located in âthe rest.â
Itâs great to see more capital getting invested in these startup ecosystems, but the real gains come when the exits start showing up. And few companies seem as interested in rise of the rest startups than Intuit.
Using Intuitâs data along with Crunchbase, I looked at the acquisitions the company has made over the past four years (itâs important to note that smaller acqui-hire-style acquisitions may never be announced). Indeed, 15 of 23 companies that the company has publicly acquired have been outside of Silicon Valley, or roughly two-thirds of the companyâs deals. (Unfortunately, purchase price data is harder to track down, so the proportion of dollars is tougher to calculate accurately.)
In the United States, I count eight companies outside of the Valley: two in Los Angeles (Lettuce and Docstoc), and single acquisitions in Sacramento (CustomerLink), Seattle (Full Slate), Philadelphia (Exactor), Boston (Prestwick) and Chicago (itDuzzit), along with todayâs acquisition of TSheets in Idaho. Thatâs particularly interesting given that the companyâs headquarters is in Mountain View, California, and a lot of Valley acquirers prefer to roll acquisitions into their existing offices.
Intuit has repeatedly told investors that one of its top priorities beyond growth of its core product revenue is to expand globally. The company considers the U.S., Canada, Australia and the United Kingdom to be its established markets, and indeed most of its global acquisitions have been in these markets. In the United Kingdom, Intuit acquired Bankstream in London, Acrede in Salisbury, and PaySuite in Brentwood, a suburb of London. In Australia, it acquired two companies, Fifo and Invitco.
Whatâs interesting is how M&A plays into the companyâs designated emerging markets of India, Brazil and France. Intuit acquired KDK Software, which produces software for tax compliance in the Indian market, which the company considers to be a key growth area. It used M&A to expand in Brazil, purchasing ZeroPaper, a cloud-based SMB accounting software product in 2015. The gap appears to be in France, where the company hasnât made an acquisition (at least, none that I could find), although considers it a key market because of âcompliance-heavy needs.â
As one of the few acquirers of small business-focused startups, Intuitâs strategy can give hope to entrepreneurs, particularly outside the Valley. The question is whether more companies will follow Intuitâs lead and buy a majority of their companies outside of their home base, or continue to only do transactions within three blocks of Caltrain in San Francisco.
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