Blackbaud buys (CHOMP!) eTapestry

Another one bites the dust. From Yahoo financial, I learned today that Blackbaud acquired eTapestry for around $25 million. That's a lot for a company that had only $7-$8 million in annual revenues and made only a small profit.

Although we had no insider information, the news didn't come as much of a surprise to us. Jay Love had sold a previous company he ran called Master Software to Blackbaud in 1997. That was really the first of Blackbaud's many product acquisitions that involved an aggressive strategy of forcing acquired clients to switch to Blackbaud or else face being dependent on software that was no longer supported. The truth is that though a lot of clients grumbled, many went along with Raiser's Edge. In fact, Blackbaud made so much money from this strategy that they've repeated it several times, most recently with Campagne's GiftMaker Pro. At the time we parodied Blackbaud's strategy with a humorous video.

Don't get us wrong, we know it isn't very funny for the thousands of non-profits who felt the rug pulled out beneath them. What amazes me is that how often organizations fail to consider the financial motivations and situation of the software vendor when purchasing software. When Jay left to start eTapestry, he raised $6.5 million from venture capitalists to fund the business. That was back in 2000 and most venture capitalists have an investment horizon of 5 to at most 10 years -- so again, the sale of eTapestry is no surprise.


So the investors in eTapestry are happy, but what about their clients? It's no secret that many people choose fundraising software because it's NOT Blackbaud. Blackbaud's products have a reputation for being complex to use, in addition to being very expensive. I suspect many of them will feel betrayed. Blackbaud has gone out of their way to say they they don't plan on integrating the eTapestry business- at least for the next year, maybe two. It is probably true, given that Blackbaud doesn't have a fully web-based product and Raiser's Edge would be tremendous overkill for the vast majority of eTapestry clients.

But one thing is for sure- Blackbaud is a public company and in their conference call last night (accessible to anyone), they made it clear that they are committed to continuing and even improving their already massive profit margins. To get a return on that $25 million purchase, eTapestry clients are destined to see increasing subscription and service fees in the future.

We think that's a shame and believe the non-profit community is best served by having a choice of solutions- competition is healthy. Blackbaud may want to monopolize the fundraising software business, but we won't let them. DonorPerfect has grown to #2 in the market the old fashioned way - winning new customers one at a time with hard work, perseverance, and a rock-solid commitment to our customers, employees, and partners. As a private company with no outside investors or debt, we've been able to finance our double digit growth for over 25 years.

In the meantime, I believe DonorPerfect offers a compelling and proven solution for non profit organizations. We offer the best benefits and best services at a fair price- and I'm pretty confident that's a winning formula for years and years to come.

If you're an existing eTapestry client or prospect, or simply a non-profit looking for a great web-based (or installed) fundraising system at a great price, give us a try. A very friendly and experienced account manager (with an average experience over 7 years!) can walk you through our products, and I think you'll be impressed- I know our clients are!