PenPath's financial boost gives it room to explore M&A

Fresh off a new investment from Gilead Group, e-commerce data startup PenPath now has the dry powder to pursue potential acquisitions, CEO Alex Cruz tells Axios.

Why it matters: While current market conditions have dampened the outlook for some startups, others see it as an opportunity to consolidate their respective spaces.

What's happening: Cruz declined to disclose details of the investment, but says, “Something that our investors are very, very good at is M&A.”

• "It's certainly something that once we are a little bit bigger, we will definitely be entertaining," he says.
• Complementary targets would unlock more specialized data and APIs, especially from large retailers like Walmart and Amazon that have vast data troves, he notes.
• PenPath is also taking a hard look at data analysis automation, he adds, noting some of those efforts are currently underway.

How it works: Cruz likens data to oil and PenPath as a refinery.

• “Everybody has too much oil, right? What we need are refineries,” he says, adding that people need to turn all this data into usable information.
• PenPath helps interpret the data and guides companies on how much they’re spending and how much they’re making.
• Adding that to that analogy with M&A, he says: “If we're the refinery, where can we get more oil? Where can we get better places to generate that oil, aka data?”

Zoom in: Disparate platforms make it difficult to match data sets and compare, especially with ads or organic social.

• PenPath collects the data from multiple platforms and makes it easier to compare apples to apples, Cruz says.

• “Whenever you want to really look at your company, holistically, you want to summarize all of that revenue from all of these different platforms.”
• PenPath mitigates the need for companies to build these tools in-house, which can be expensive, he says.

Of note: Gilead will provide many back-end services for the company, including support with financing, HR and accounting, says Cruz.

What’s next: Cruz says he feels good about the company’s financial foundation and doesn’t see the need to tap the markets for additional capital.

• “I've met a lot of founders who were not that happy with always chasing the next raise. And I've met a lot of founders who've just been so successful with having a self-sustained real business,” he says.
• “We're in a position to do the real business.”