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VC deal reaches from Silicon Valley to Columbus, Ga.

VC deal reaches from Silicon Valley to Columbus, Ga.

Financial technology firm Delta Data Software has raised $12.5 million from Silicon Valley-based private equity firm Accel-KKR.

Columbus, Ga.-based Delta Data provides back-office software for the financial retirement industry, which include bank trusts and mutual fund companies.

Delta Data’s products includes a stock trading platform, and data management, compliance and analytics software. The company reported revenues of $14 million last year, up 40 percent from the past year, Chief Operating Officer Whitfield Athey said.

Delta Data’s automated software is seeing strong demand as financial institutions turn to automation to offset declining fees. The company’s software can reduce back-office workforce by nearly 90 percent. “The compression on fees in the [financial] industry has required technology to handle high volumes of transactions with very few people and high accuracy,” Athey said.

Consolidation in the financial record keeping industry is creating companies large enough to benefit from the economies of scale that software brings.

“On our [stock] trading system, the volume of trades per day has, on average, gone up 20-fold in the past decade,” Athey said.

Increased regulation is also driving demand for accurate data and transparency, which creates demand for software.

Delta Data provides the back-end software that helps mutual funds, brokers-dealers and bank trusts handle daily processing and data management complexities, said Frank X. Dalton, partner at Atlanta-based Fulcrum Equity Partners.

“It’s very important stuff and very sticky,” Dalton said. “Once you put it in, you’re not inclined to pull out the plumbing.”

Fulcrum considered investing in Delta Data over a year ago, but passed on it. “It just took a bigger check than we have to take this thing to the next level,” Dalton said.

The Accel-KKR investment is validation of Delta Data’s business. “They obviously believe there’s a real growth story here,” Dalton said.

For Accel-KKR, which raised an $800 million fund last year, Atlanta is the nexus of the technology community in the Southeast. In 2013, Accel-KKR invested in Norcross-based MEA-NEA, which provides technology solutions to medical and dental offices.

“Atlanta [and the Southeast] are becoming more robust markets for technology companies,” Jason Kurtz, operating principal at Atlanta-based Accel-KKR Consulting Group said earlier.

Menlo-Park, Calif.-based Accel-KKR provides growth-stage private equity — typically investing $10 million to $100 million in growing and profitable technology businesses. It is among several out-of-state private equity firms eyeing Atlanta. New York-based private equity fund Bregal Sagemount plans to invest a chunk of its $500 million fund in Atlanta and Southeast software, fintech and health IT companies.

For Delta Data, Accel-KKR brings marketing experience, critical for the Columbus company which competes with billion-dollar diversified companies, such as Pershing LLC and Broadridge Financial Solutions Inc..

Accel-KKR’s consulting team includes the former marketing chief at software giant Ariba Inc. It doesn’t hurt that the private equity firm’s investors also happen to be Delta Data’s customers and potential customers.

Delta Data launched nearly 30 years ago as a public accounting firm. Since then, the company has raised more than $22 million. The new capital from Accel-KKR will be used for product development and sales and marketing. For Delta Data, growth comes in developing new software products it can sell to existing clients. The reason, Delta Data is a small player in a highly consolidated industry.

“There is a small number of vendors in this space and that number is shrinking,” Athey said. “We really only have one main competitor per product.”

Scaling a fast-growing tech company in a small town such as Columbus can be a challenge. “If you hit a rapid growth cycle, it is a challenge to find A-game people in a short period of time,” Athey said.

While there is abundant and inexpensive real estate in Columbus, the office space inventory is not always suited for a tech company that requires open-floor plans and other millennial friendly amenities.

Those factors have led Delta Data to periodically look north for relocation, or expansion.

“It is a constant re-evaluation of, do we have access to the resources we need (in Columbus), are the office space requirements we have currently serviced in our area?” Athey said. “If either of those two changed significantly, we would be looking at Atlanta as a potential (relocation site).”

The high quality of life and low cost of doing business afforded by a smaller town, coupled with a three-decade history, keeps Delta Data anchored in Columbus, for now.

The cost of doing business in Columbus is about 15 percent to 20 percent lower than in Atlanta, based on labor and real estate costs, Athey said.

“Employee turnover is almost non-existent in Columbus,” Athey said Delta Data Software Inc.

  • Headquarters: Columbus, Ga.
  • Background: Delta Data provides back-office software for the financial retirement industry, which includes bank trusts and mutual fund companies. The company’s products includes a mutual fund trading platform, and data management, compliance and analytics software.
  • In the news: Delta Data raised nearly $12.5 million from Silicon Valley-based private equity firm Accel-KKR.
  • Employees: 56

Original Article

Delta Data Staff
Our staff writers work with Delta Data executives and industry experts to bring you news, trends and insight on the mutual funds industry, particularly issues, regulation, and technology in regard to fund oversight and distribution. Delta Data provides the back-end solutions that companies use to process billions of dollars of transactions and stay ahead of the change™.
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