Telstra Ventures cashes out in $2.75bn OpenGov deal with Cox Enterprises

The telco’s venture capital arm has secured a payday after one of its investments was taken over in a $2.75bn deal.

Telstra Ventures general partner Yash Patel is ‘thrilled’ about the firm’s exit from OpenGov.

Telstra’s venture capital arm has secured a payday after one of its investments, OpenGov – a software provider for cities and state agencies – was taken over by Cox Enterprises in a $US1.8bn ($2.75bn) deal.

Telstra Ventures has been an investor of the San Francisco-headquartered OpenGov since 2017. It did not reveal the size of its investment, which was a minority stake, but Telstra Venture’s general partner Yash Patel said he was thrilled the company had secured the exit in what has been touted as one of the biggest deals in govtech history.

Telstra Ventures has $1bn of assets under management and has generated $617m in cash realisations since it was founded in 2011 as an independent venture capital fund.

“Honoured to have been an investor in OpenGov since 2017 and thrilled to see them partner with Cox Enterprises on this next stage of growth as they continue to execute their mission to power more effective and accountable government,” Mr Patel wrote on LinkedIn.

“Zachary Bookman (OpenGov co-founder and chief executive) and the OpenGov team are a force of nature.”

Atlanta-based Cox – a 125-year-old family-owned provider of communications and automotive services – already had a minority stake in OpenGov, which develops software to assist in tasks, including budgeting, procurement and asset management, across local governments. It has about 1900 customers across all US states.

Cox has now secured a majority investment, which Mr Bookman said would accelerate product development. Cox communications business is the third biggest in America, with 6.5m customers, while its automotive division owns the valuation tool Kelley Blue Book.

“We’ve grown thanks to outsized investments in engineering and customer success and because of an extraordinary team aligned on values, hard work, expertise, and passion,” Mr Bookman said.

“With this investment, one of the largest in govtech history, we intend to accelerate product development, advance our mission, and improve communities for generations.”

Mr Bookman said legacy software solutions dominate the govtech industry. “None are equipped to solve the problems facing today’s state and local governments. Challenges include higher demand from residents for digital and cloud services, greater expectations for transparency and community engagement, increased risk of cyber and ransomware attacks, and a growing talent gap as the workforce retires.

“OpenGov’s applications tackle these problems head on, future-proof organisations, and give our nation’s public servants the technology they need to do their jobs effectively.

Cox chairman and chief executive Alex Taylor said the deal came at a critical juncture in US history.

“This is an important time for our country in many ways. In 1920, when my great-grandfather was Governor of Ohio, he expressed the need for our people to have ‘an abiding confidence’ in their government. Now, all these years later, we are very excited to help OpenGov grow and build for the future.

“Powering more effective and accountable government is an inspiring mission, and OpenGov delivers a better experience for governments, residents and businesses alike.”