PSG leads $200M Backlight deal

Growth equity firm PSG led the investment of more than $200 million in a new media tech holding company called Backlight.

Why it matters: The streaming era has created high demand for premium video content. Companies that focus on backend video and streaming technology have become a ripe target for investment.

State of play: Backlight executives see an opportunity to bring together several small tech companies and give them marketing and other development tools they need to scale.

• "There are such incredible tailwinds with the market," Backlight president and CEO Ben Kaplan tells Axios. "All you have to do is look at Netflix's endless scroll, and that's just an indicator of the sheer volume of high-quality content that's being produced."

Details: Backlight currently owns five media software companies — Celtx, ftrack, iconik, Wildmoka and Zype — that work across video production, management and distribution.

• Formed last summer, Backlight funded Zype's acquisition of MAZ, and it's looking for more acquisitions.
• "PSG has a great track record of combining organic growth with inorganic growth, and so if there's an opportunity to do that and the deal makes sense, we'd of course be interested," Kaplan says.
• Backlight's financing is from PSG's fifth U.S. flagship fund, which closed last year at $4.5 billion. PSG is Backlight's majority backer and is joined by some existing investors of the acquired companies, while some of the existing investors exited with PSG's round, says Kaplan.
• The leadership team includes Marisa Linardos as CFO and Mike Green as chief growth officer.

By the numbers: Kaplan declined to disclose Backlight's valuation or deal terms on the acquisitions.

• But he said PSG typically invests in companies that have $5 million to $50 million-plus annual recurring revenue and with organic growth rates of 20 to 100-plus percent year over year.

How it works: "These are cloud-based solutions to make the lives of the Netflix's and HBO's and Vevo's significantly easier," Green says.

• Not every offering is cloud-based, however. Kaplan says ftrack has software components that are not purely cloud.
• Backlight also does not require its clients to use every offering.
• "We are not building a monolithic, single-platform ring to rule them all," Kaplan says. "What we're really trying to make clear is we reserve the right to try to sell you on some other things, but fundamentally, if you need us to integrate with competitive products, we're going to do that."

Editor's note: This story has been corrected to show that PSG led an investment of more than $200 million in Backlight. PSG did not invest more than $200 million.