SugarCRM acquires Contastic for natural language-based predictive sales tools

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Following its acquisition of Stitch last year, SugarCRM — a CRM competitor to Salesforce — has picked up another startup to enhance the arsenal of intelligent sales tools that it provides to its customers. The company has acquired Contastic, a startup based out of Mountain View that built a platform based around natural language processing technology to analyse communications between sales people and their contacts, and help them keep up those relationships.

Terms of the deal aren’t being disclosed. Contastic had raised an undisclosed amount of funding from investors that included IDG-Accel and Lightspeed.

Contastic’s site looks like it went offline back in January, which Contastic now tells us was due to the acquisition. SugarCRM says that the deal will include intellectual property rights and other assets but no customers. According to the archive of Contastic’s site linked here, previous customers had included employees at Oracle, Accenture and Tesla.

As part of the deal, Contastic’s founder and CEO Cy Khormaee will join SugarCRM as its director of product management for predictive analytics. “Contastic’s team is thrilled to join Sugar to expose their NLP technology to a much wider customer base in the coming months,” the company said in a statement.

Contastic had built a platform that draws on data sources like email, LinkedIn and Salesforce essentially to create a composite picture both of the target contact, and a sales person’s existing relationship with that person, then also providing extra content — suggestions of relevant news stories — to help start up conversations with those people.

It sounds like SugarCRM’s interest in Contastic is specifically around the content suggestion aspect of its platform. In an interview, Larry Augustin, SugarCRM’s CEO, said his company will be using the technology to “process and understand emails and other interactions between individuals, suggesting relevant content.” Some of this technology is likely to make its way into future releases of SugarCRM’s primary platform and Augustin says the company is still thinking about how it will further monetize the assets.

(Indeed, Stitch, the startup SugarCRM acquired last year, was also a tool to help sales people proactively follow and close deals.)

Contastic competed with and sat alongside a number of other tools on the market that are also in the general category of predictive sales like Clari, 6sense, InsideSales and more. This — combined with the fact that a lot of CRM is consolidating around specific platform players like SugarCRM, Salesforce and Oracle; and that there is something of a funding squeeze for some startups — will mean that we are likely to see more M&A activity, says Augustin.

“There is a lot of interesting tech that we are working on around helping people be a lot more connected and establish business relationships, but a lot of those feel like they are features that need to hook into a broader system,” he said. “We have a very broad platform that extends the whole cuxtomer lifecycle, and whether you are talking about a Contastic or Stitch it’s hard to monetise them separately. We are going to remain acquisitive. Let’s see what others in the space plan to do.”

What this will also help SugarCRM do is strengthen its own product while it too waits for its next “liquidity event.” The company’s most recent round of new funding was a $40 million Series F i 2013 — made at the time as the company was anticipating an IPO.

Times, for sure, have changed, but Augustin says SugarCRM — which started as an open source project but has since stopped updating its open source edition in favor of a more commercial model — is in a strong position.

“We have been cash flow positive since 2014. We don’t need to raise money and we have a strong balance sheet,” he said. “I’ve always said that our goal is to be a large public company. We have the scale and continue to think of that as a goal but the markets are not attractive right now and we don’t need to do it. We’ll do it when it works for us as a business.”

This is SugarCRM’s fourth acquisition — after buying iExtensions back in 2011, Stitch and an (until now) unreported acquisition of process management and workflow technology from ProcessMaker (but not ProcessMaker itself).