SeatGeek, started in 2009 as a ticket aggregator with a handful of employees, announced a $56 million acquisition of an Israeli company that nearly doubles the company’s employee base as it seeks to further disrupt the ticket industry.
SeatGeek used its most recent round of funding ($57 million) to finance the acquisition of TopTix, by far SeatGeek’s largest acquisition to date. TopTix’s software is used by more than 500 clients — from sports teams to museums — and gives SeatGeek the necessary technology to be a primary ticket seller.
“TopTix is a global company with millions of tickets sold each year and it has clients in 16 countries,” SeatGeek co-founder Russ D’Souza told USA TODAY Sports. “It really expands the scope of what we are able to do. We want to open up the ticketing platforms that were built decades ago.”
The major aim for SeatGeek, along with other startups like TicketIQ and Vivid Seats along with the more established eBay subsidiary StubHub, has been to create an open secondary ticket market where fans and brokers sell their seats for events. There are numerous options that didn’t exist even a decade ago on the resale market once dominated by scalpers.
But SeatGeek, bolstered by Tuesday’s acquisition, now takes aim at the primary ticket behemoth Ticketmaster, a subsidiary of concert promoter Live Nation that has long dominated that segment. Ticketmaster has been accused of anti-competitive practices and its order-processing fees were part of a long-running class action lawsuit settled last June.
“Ticketmaster has been the 800-pound gorilla,” said former Arizona State University legal and ethical studies professor Marianne Jennings, who has followed the ticket industry for decades. “This a natural part of the marketplace. Somebody comes in and challenges the dominant company,” she said. “There needs to be transparency. I’ve argued since about 1989 that there needed to be more information available so the market could grow. The big players try to control that information, including who had access to it. That doesn’t work.”
SeatGeek had already moved beyond being a ticket search engine for sporting events and concerts in recent years. It inked a deal with Major League Soccer in July to be the league’s worldwide ticketing partner and, this season, started as Sporting Kansas City’s official primary and resale ticket supplier.
D’Souza said the acquisition of TopTix’s ticket software, known as SRO (Standing Room Only), puts SeatGeek in a better position to secure primary ticketing deals with teams and leagues.
“The typical primary ticket deals run five years, so that means each year about 20% (are up for bid),” he said. “We can shake up the industry.”
This latest round of investment, which SeatGeek is calling its Series D round, brings the total venture capital financing to about $160 million, according to TechCrunch. After SeatGeek incorporates TopTix and its 115 employees, it will have 250 worldwide.
SeatGeek’s biggest acquisition previously was a $2.2 million deal to purchase ticket search engine FanSnap in 2013.
The TopTix deal seemingly makes an initial public offering in the coming months more likely for SeatGeek.
“We are big believers in making SeatGeek the biggest business we can, and this acquisition will result in dramatic growth in a huge, untapped market globally,” D’Souza said. “This only helps in our ambitions to be a large, publicly-traded company.”