MessageBird is spending $600 million to acquire email delivery provider SparkPost, a move that gives the largely international company a bigger foothold in the U.S. and intensifies its rivalry with Twilio.
To pay for the deal, MessageBird, which PitchBook values at $3 billion, went back to investors and raised an additional $800 million in series C funding, per CEO Robert Vis, bringing the total amount for the round to $1 billion. The deal comes just a few months after SparkPost itself nabbed $180 million in investment from LLR Partners, NewSpring Capital and PNC Bank.
"We reached a point where we all thought this would make a ton of sense. And then we didn't have the money," Vis told Protocol. "Our customers had already been asking when we were going to come with a better email offering … [but] it's hard to build a really strong email company without living and breathing it."
Similar to Twilio, MessageBird has established itself as a leading provider of tools for businesses to communicate with customers. While Twilio has a large domestic presence, Vis says MessageBird is the leader outside the U.S. That comes with advantages, like understanding the laws in certain jurisdictions. In India, for example, companies are restricted from sending messages to customers past a certain time each day, according to Vis.
But despite doing international work for clients like Uber and Facebook, MessageBird needed to capture more U.S. business. By buying SparkPost, the company ramps up its user base to 25,000 business customers, adding well-known names like Disney, Adobe and J.P. Morgan. While that is clearly a shot at Twilio, Vis said the deal has nothing to do with the competitive landscape.
"We're the leader in the international markets," said Vis. "In the U.S., completely different story. This isn't a move against Twilio or any of other competitors. This is a very clear market move from us into the U.S."
On paper, MessageBird is behind — at least, compared to Twilio — in offering robust email communication tools, given the prevalence of the medium and its ubiquitous use among companies to interact with customers. While Vis says MessageBird has been eyeing the space, it was constrained by a lack of suitable acquisition targets, particularly after Twilio bought SendGrid in 2018 for $2 billion.
It's the latest in a string of acquisitions for MessageBird. It recently bought videoconference provider 24sessions, data platform vendor Hull and API dealer Pusher, which together totaled a much lower price tag of $100 million. Now SparkPost, which it was still able to nab for a bargain compared to what Twilio paid for SendGrid, helps plug a major gap for MessageBird. It now has the means to reach customers across multiple channels, including text, email, video and live chat.
The deal also gives MessageBird powerful analytics, according to Vis, a service that SparkPost actually licenses out to competitors. (Vis declined to say if SparkPost licenses the software to SendGrid.)
"This is something we have wanted to do for a while," said Vis. "The importance of email is getting into the inbox. And that is something that SparkPost can do better than competitors."