San Antonio tech company Jungle Disk has acquired three product groups to add to its suite of cybersecurity offerings. The deal is the latest splash made by a growing agent in San Antonio’s economic development: private equity funds eager to buy up tech groups from afar and relocate them to the city’s emerging tech district.
Jungle Disk, a San Antonio-based cybersecurity provider for small businesses, has acquired three product groups — KeepItSafe, LiveVault, and OffsiteDataSync — from J2 Global in a leveraged buyout backed by a new, local private equity firm, Dry Line Partners. Backing also came from private equity firm Porthcawl Holdings, which bought Jungle Disk from Rackspace in 2016. Financial terms of the deal were not disclosed.
Michael Girdley, one of Dry Line’s partners, said the acquisitions make Jungle Disk the second largest privately held tech company in San Antonio in terms of revenue. (Pathwire, an email services provider, is usually considered the biggest.)
The deal expected to be a major development for the city’s tech scene. David Heard, president of tech industry advocacy group Tech Bloc, said it will take time for people to “fully appreciate the heft and size of the three assets that are being purchased and what the size of the new company is going to look like.”
The three product groups acquired by Jungle Disk are headquartered in Los Angeles. Teams for these groups are currently there and outside of Boston.
Jungle Disk was previously based in the Rand Building downtown but gave up its office during the pandemic. Girdley said the company likely will move into new office space in the city’s tech district.
Girdley say the acquired assets are “much larger” than Jungle Disk, though he declined to elaborate further.
The acquisitions are intended to make Jungle Disk more competitive for bigger clients, expanding its market reach. The acquired companies provide services to thousands of medium and large clients spread across the globe and clustered in industries like health care, information technology, and financial services.
Jungle Disk, which is owned by Porthcawl Holdings and whose CEO is a partner at Dry Line, provides a suite of cybersecurity services like data backups and password management, among others, meant to protect data from system failures, human errors, and cyberattacks.
The deal marks the first investment for Dry Line, which is based in San Antonio and Austin. It plans to acquire additional technology businesses in the future, the release said.
While billion-dollar private equity funds like Blackstone and Apollo typically make headlines, smaller funds have proliferated in recent years. A 2020 report from McKinsey found that the number of private equity-backed companies in the United States has increased from 2,000 to nearly 8,000 in the last 20 years.
In San Antonio, tech-oriented private equity funds have become a small generator for economic development — alongside more typical methods like recruiting companies or growing home-based ones — by relocating companies to the city.
“We are upping our private equity game,” Heard said, who noted that these kind of funds have for years been a presence in metro areas with higher-profile tech scenes. “It’s a small but growing cottage industry in San Antonio, and it’s having an economic development impact.”
The tech companies these funds relocate are normally hard to come by, Heard said, since San Antonio has not “historically been the most obvious choice.” (Heard’s organization aims to change that.)
For a couple of examples: Scaleworks, founded in 2015 as what Heard said was the first private equity fund in this model, relocated social media marketing platform Tint from San Francisco to the city in 2018. Dura Holdings, also founded by Girdley, relocated Moki Mobility, a phone software company that moved its headquarters from Utah to the tech district after its acquisition in 2019.
Jungle Disk CEO Bret Piatt said he and others at the tech company are thrilled.
“We firmly believe that adding these businesses to Jungle Disk will greatly enhance the customer experience and provide employees and investors with critical mass and greater resources for future growth,” he said in a prepared statement.
