San Luis Obispo-based SMS Masterminds has raised $12.2 million through its parent company and will soon bring a new public company headquarters to the Central Coast.
SMS Masterminds makes a technology platform for local marketers in 100 different markets to offer text-message-based loyalty programs to small businesses. Last fall, the company agreed to merge with SpendSmart Payments Co., an Iowa company that specializes in pre-paid debit payment systems and trades over-the-counter under the symbol SSPC. The Iowa firm purchased SMS Masterminds in an all-stock deal worth about $5.1 million when it closed in February.
The deal was in some respects a reverse merger — at $2.4 million in sales in 2012, SMS Masterminds had more than double the revenue of SpendSmart. SMS Masterminds CEO Alex Minicucci was named CEO of SpendSmart on April 3 and is now the company’s largest shareholder, with about 15 percent of the firm’s stock. All of SMS Masterminds employees were also given stock in the company as part of the deal.
Minicucci told the Business Times that the company is in the process of moving its corporate headquarters to San Luis Obispo. He said the company had set out to raise $10 million in fresh capital, but investor demand drove the total higher.
“One of the things I’m most proud of is that we got up to the point of making the deal with SpendSmart as a private company with no outside money and really no debt,” Minicucci said. “We bootstrapped it until we were ready to make a big leap forward.”
Minicucci said the plan now is to integrate SpendSmart’s payments technology with SMS Masterminds’ loyalty programs to create a sort of universal loyalty card that would work across SMS Masterminds’ system. Beyond that, the company will be looking to parlay SMS Masterminds fiscal strength — it has been profitable nearly since inception — to acquire smaller mobile marketing companies that fit with its strategy.
“The industry is very fragmented as far as mobile goes,” Minicucci said. “We want to start folding these guys in and become the 800-pound gorilla in the room.”