Distil Networks has always been about about automated, intelligent bot detection. Rival ScrapeSentry has gone at it from a different angle, using human analysts to help customers understand bot behavior. Today those two approaches came together when Distil acquired ScrapeSentry in a stock and cash deal.
While Distil CEO Rami Essaid wouldn’t reveal an exact purchase price, he danced around it by saying that ScrapeSentry has a couple of million in revenue and deals tend to be in multiples of between 4x and 8x revenue. He chose to leave it ambiguous, but doing the math that would fall somewhere between $8 million and $16 million.
Still, it’s not an insignificant purchase for a company that itself has raised around $44 million and Essaid admits he had to have a conversation with his board of directors before he pulled the trigger on the move. It turned out the board was apprehensive about using investment capital in this way.
“It was a tougher conversation then I expected,” Essaid said. He said in the end, it was good to be challenged because if he couldn’t defend it maybe it wasn’t such a great move.
In fact, it turned out to be a win on several levels.
He started looking at ScrapeSentry as an acquisition target because he was hearing from larger customers that they wanted more than simply identifying and blocking the bots. They wanted to dive deeper with a human expert, and this was taking time from his engineering and data science personnel.
“Enterprise customers want an analyst they can work with to add a human element to everything we do. It just made sense to combine forces,” he said.
What’s more, these customers were willing to pay a hefty price for that service. The deal also included a dozen engineers with domain expertise. Finally, buying ScrapeSentry took one of his competitors off the board. Given all of that, the board agreed to the acquisition.
ScrapeSentry, which is based in Stockholm, Sweden was founded a decade ago as part of Sentor, a European security firm. Sentor spun it out as a separate company about a year ago. The company has 20 customers.
While the customers are lucrative, ScrapeSentry CEO Martin Zetterlund said one of the things that attracted him to Distil was not just the team and the product, but their customer acquisition prowess. “We haven’t been quite as good at it. I’m looking forward to working with these guys to see how they do it,” he said.
After a decade of running as an independent unit, Zetterlund admitted he has never been part of a bigger team. That could take some adjustment, but he says he’s looking forward to the change.
It should help that Distil plans to use ScrapeSentry as its EU headquarters and let it continue to service its current clients while maintaining its existing product. Essaid promises the product will continue and that over the next year the two teams will work to incorporate the ScrapeSentry technology into the Distil Networks bot detection platform where he sees the two products working together nicely.
“At end of the day, there are some things you can’t automate, that you can’t do with machine learning and some of that is client interaction,” Essaid said. With ScrapeSentry their clients will be getting the best of both worlds.Featured Image: Sergey Nivens/Shutterstock