Greater Sum Ventures and the Vacation Rental Industry

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Greater Sum Ventures

There is research to suggest that the global vacation rental market currently stands at around $169.7 billion. That number is only set to get bigger and more lucrative as more and more people opt for the casual and affordable homestay as opposed to traditional hotel bookings.

With such big money at play, you would logically expect to start seeing some of the biggest names jostling for position within the market. True to that expectation, corporate juggernauts like Google have already started dipping their toes into this pool of vacation renters. Some private equity firms such as Greater Sum Ventures have also started making hefty investments in the field.

Greater Sum Ventures Getting into the Vacation Rental Industry

Greater Sum Ventures, a private equity firm based in Tennessee, is no stranger to entrepreneurial growth. For years now, the company has found, funded and helped a large number of promising start-ups realize their dream and succeed in their various fields. Now, Greater Sum Ventures has firmly set its sights on the vacation rental industry, and they are doing much more than just dipping their toes in.

Greater Sum Ventures Rollups

Partnering with another venture capital called “Insight Venture Partners,”Greater Sum Ventures have slowly but steadily been rolling up an impressive number of large tech companies that have interests in the vacation rental industry.

As things stand today, Greater Sum Ventures has taken up majority stakes in huge companies such as:

As impressive as that list already is, that’s not all that Greater Sum Ventures wants to do. There are many other companies that are still in the “due diligence” phase and may come on board and join the ever-expanding portfolio.

While the nitty-grittydetails of the deals are a little secretive for obvious reasons, there are reports that the purchase agreements include the usual perks you would expect:

  • Cash payouts
  • Sizeable shares for founders of the bought-out companies
  • Earnout considerations that will be purely based on performance

Each one of these deals is different than the other with some founders and sellers getting more optimal options than others. At the end of the day, however, each one of these companies can claim that GSV (Greater Sum Ventures) has invested in them and as such can leverage that information to get further financing from interested parties.

While it’s true that GSV has purchased majority shares in many of these companies, these deals are exactly being labeled as “acquisitions” and all those involved are bound by strict non-disclosure agreements.

What Does GSV Intend to Do with All these “Acquisitions”?

It first must be stated that there is no official communication or comments from GSV as to what they intend to do with all these acquisitions. However, people can make educated guesses, and there are some sources that have shed some light into the endgame.

The general idea is that GSV intends to acquire as many of these vacation rental tech companies as possible. At which point they will then look for synergistic cost-saving avenues, renegotiate and even optimize the currently existing contracts within the companies, once everything is in good order, they will then package the companies into a highly efficient vacation rental technology group and sell it off all within twelve months.

This has all been made possible by the fact that GSV showed interest in a large number of vacation rental tech companies who then opened up their books in hopes of an acquisition that never panned out. This allowed GSV to have unprecedented insight into the financing and profitability of the sector.

It also allowed them to see what else is out there and what the industry really needs. As such, they can now simply package their vacation rental technology group to meet most, if not all of the industries anticipated needs.

Industry Concerns Over GSV Acquisitions

As you would expect, there are some concerns from many of the industry players as to how these acquisitions will affect the field in which they do business. These concerns have merit since a majority of the companies acquired are software developers who have promising innovations in the works; innovations whose implementation could very well change the field.

Another concern is over what has already happened in the industry in relation to innovation and implementation.

Over the past few years, a number of big companies offering some of the most innovative software solutions have either shut down, discontinued the service, or sold out. Take for example the shut down and end of support for legacy systems like PropertyPlus or Entech and First Resort which was a HomeAway software that was also shut down.

For most property managers and vacation rental homeowners, these solutions represented excellent options as far as the efficient and effective running of their businesses were concerned. With their shut down, discontinuation or acquisition, these systems are either no longer on offer, or there is a severe backlog in implementation which not only cost them money but is also costing them a great deal of time and frustration.

Yet another issue is that with all these acquisitions, property managers are seeing the cost of a lot of their trusted systems increase while the implementation and tech support end of things is decreasing.

In short, the main concern is that with GSV acquiring so many software companies that were directly concerned with innovation in the vacation rental industry, this innovation will either slow down or stall.

It remains to be seen just how these purchases and acquisitions will affect the industry as a whole, but these concerns are as valid as can be. Furthermore, it doesn’t seem as though Greater Sum Ventures is going to slow down as far as their search for more vacation rental technology companies to acquire or buy out is concerned.

As for now, the market can only wonder and speculate about what will become of the industry’s top innovations once they get acquired by GSV.