Democrats’ Major Campaign Tech Firm Shifts Under New Private Equity Owner

In August 2021, when the parent company of NGP VAN, a privately owned database that hosts Democrats’ most sensitive data, was sold to Apax Partners, a British private equity firm, a major vulnerability in the party infrastructure was exposed. NGP VAN, which is part of the fundraising management software company EveryAction, is one of two major organizations that run the coveted organizing, voter file, and compliance tools that the Democratic Party relies on to build power. Clients and observers worried that private equity, with its reputation for decimating companies in industries from health care to food to local news, would risk NGP VAN’s integrity — and that of its precious data.

Private equity already had its hands in NGP VAN. In 2018, Insight Partners, another venture capital and private equity firm, invested in EveryAction and appointed a new chair to its board. But the Apax acquisition raised fresh concerns for several strategists, progressive fundraisers, and campaign tech workers, including some of the firm’s own clients, that its new ownership might put the mission of NGP VAN — to support Democratic candidates — at odds with Apax’s goal of making money by cutting costs and maximizing profits. A group of more than 50 operatives expressed concerns that the Apax acquisition would exacerbate some of the worst ills of Democratic and progressive campaign tech space, like exploiting valuable voter file data to spam clients and target vulnerable voters, or using voter information for commercial purposes or fringe and right-wing causes.

“Private equity literally can only do one thing,” said Alex Lawson, executive director of Social Security Works, whose PAC is an NGP VAN client. Last August, Lawson and dozens of other nonprofit, tech, and campaign workers signed an open letter addressed to the heads of EveryAction and Apax, which is worth $51 billion and has acquired more than 100 companies, expressing skepticism over the merger. Lawson told The Intercept that global investment and venture capital firms like Apax “wring every drop of revenue out of something by cutting costs, which means firing people, hollowing it out. Then exit.”

Three of NGP VAN’s top executives quit, two of them shifting to roles on the company’s advisory board. In March, the firm released a plan to revamp its services ahead of the 2022 midterms and the 2024 presidential election. With it came a new leadership announcement: Chelsea Peterson, then the firm’s senior vice president of sales and formerly a regional field director for the Democratic Congressional Campaign Committee, became NGP’s general manager. The strategic document that touted her role seemed rather innocuous, but it hinted at bigger changes to come — including the coming launch of a “larger parent brand.”

Firms like Apax “wring every drop of revenue out of something by cutting costs, which means firing people, hollowing it out.”

The next week, the firm introduced its new corporate name: Bonterra. An umbrella that covers what were once four companies — EveryAction; another fundraising software for nonprofits called Network for Good; and two nonprofit and philanthropic tech companies that Apax combined with EveryAction in the August merger, Social Solutions and CyberGrants — Bonterra’s stated goal is to connect nonprofits to donors. While the four companies adopted the Bonterra name, NGP VAN, though functionally in the same position, remained a stand-alone brand. It will continue to operate its suite of campaign tools, including VoteBuilder, its database of highly valued — and targeted — Democratic National Committee voter file information. In 2019, EveryAction acquired ActionKit, a service that The Intercept uses for its email newsletters and fundraising.

Though the move may have signaled growth and prosperity on the corporate board, for some strategists and NGP VAN clients, it seemed to confirm their worst fears: that the company’s new structure meant a dilution of the political mission in favor of scale, no matter what the issue. EveryAction had largely maximized its reach in the campaign tech space, but Bonterra serves more than 15,000 nonprofits and more than half of the Fortune 100 companies.

“Even under the previous private equity ownership, Stu [Trevelyan, EveryAction’s former CEO] had been talking about the intent to really go into the nonprofit space in a bigger and bigger way,” said Josh Nelson, who organized the open letter last year; Nelson is the CEO of Civic Shout and a co-founder of the Juggernaut Project, two email and text acquisition firms that help Democratic campaigns and progressive groups expand their email lists.

Fears about dilution of the company’s political mission are unfounded, Peterson said in a statement to The Intercept. “Bonterra is investing in NGP VAN. There is a clear strategy, investment initiatives, and a long-term roadmap that will allow NGP VAN to continue scaling its impact and innovation; moreover, there continues to be a clear plan for deeper investment in supporting our valued political customers,” Peterson said. “As such, to suggest that the NGP VAN is deemphasizing its traditional mission and shifting its focus to more business in the non-profit space is inaccurate.”

But if EveryAction and NGP VAN were eroded, Democratic fundraisers would not have many comparable places to turn. “If you’re a Democrat running for office, you have two options” — NGP VAN and Action Network — “for technology to contact supporters through email,” progressive fundraiser Michael Whitney told The Intercept. (Whitney previously worked in fundraising for The Intercept.) That structure sets up “a single point of failure for running different parts of Democratic campaigns.”

Progressive operatives have long been critical of NGP VAN’s effective duopoly over software for Democratic campaigns. Action Network, built to protect voter data from being used outside an organizing purpose, is its major nonprofit competitor. ActBlue, a major Democratic fundraising firm, integrated its services with NGP in 2018. Several other groups have tried to replicate the companies’ products in an effort to expand access and compete with Republican firms that have outmaneuvered Democratic operatives — especially in 2016, when they helped Donald Trump win the presidential election. Billionaire Democratic donor Reid Hoffman’s Alloy, which “rose from the ashes” of Hillary Clinton’s defeat to Trump, according to Fast Company, lasted less than a year. (In February, Hoffman gave half a million dollars to Mainstream Democrats, a new PAC targeting progressives in several Democratic primaries.) Other smaller outfits have had more success, like Civitech, a progressive tech firm that acquired several of Alloy’s tools last year, and the Movement Cooperative, a New York City-based vendor that’s partnered with entities like MoveOn, Forward Majority Action, and Real Justice PAC.

But over the last decade, EveryAction and NGP VAN’s dominance has only expanded: The firm has acquired campaign tech outfits that tried to compete in the space, including ActionKit, Mobilize, Salsa Labs, and Blue State Digital.

“The concentration of such a tremendous customer base and user base gives your company unprecedented power to shape the future of Democratic and nonprofit fundraising, email, advocacy, supporter engagement, and more,” read the August letter to the firm’s leadership.

When Apax combined EveryAction, Social Solutions, and CyberGrants, it created the “second largest and fastest-growing social good software company in the world,” according to EveryAction’s release at the time. The transaction, “several times larger than any [merger & acquisition] in the history of the social good software sector,” was billed as a much-needed injection of capital into the political infrastructure behind the bulk of Democratic campaigns in the country.

Recognizing this influence, the 50 concerned strategists and clients wrote that the company’s role comes with “a profound responsibility to play a leadership role in pushing the digital fundraising industry in more ethical and sustainable directions.” But “as it stands today, EveryAction is not playing that role. In fact, while a vast majority of your company’s customers use your tools responsibly, your customers also include prolific political spammers and some of the most egregious senders of deceptive political emails in the industry.”

The letter cited a New York Times article on how campaign fundraising tools trap older Americans with misleading tactics and automatic recurring donations. EveryAction clients “have continued engaging in many of the other tactics outlined … to take advantage of senior citizens and other potential donors.”

“That is how you squeeze money out of data. You rip off old people. And you rip off people who are the least able to fight against it.”

In order to maximize profits from data, companies can purchase lists of people in memory care facilities and target them for contributions, Lawson said, or buy lists of people who have used credit-repair services after falling victim to scams. “That is how you squeeze money out of data,” Lawson said. “You rip off old people. And you rip off people who are the least able to fight against it.”

The company has acknowledged in the past that its clients sometimes use its tools to spam voters with unsolicited emails or opt them in to emails they haven’t signed up for without letting them unsubscribe. But Peterson told The Intercept in her statement that speculation “regarding the use of client data to ‘spam clients, target vulnerable voters’, etc. is unfounded. Importantly, any such activity would run counter to NGP VAN’s terms of service.”

Mike Liddell, EveryAction’s general manager for digital, wrote in a blog post last summer that the company had “declined, and will continue to decline, to work with organizations that focus on being anti-choice, anti-LGBTQ rights, anti-action on climate change, anti-racial justice, etc.” He stressed that “we never sell, rent, or otherwise provide any email addresses to anyone.”

“NGP still has a huge spam problem,” said Nelson. The problem has been noted in perennial public complaints from Democratic donors. “And it’s still the only entity that could single-handedly make a huge dent in the Democratic Party’s spam problem if it chose to do so.”

To strategists who raised alarms about the merger last year, prospects for improving this dynamic under Apax ownership don’t look promising. Private equity ownership can also have practical impacts, like saddling companies with debt or cutting additional staff. And the continued circuit of acquisitions by and of EveryAction doesn’t necessarily give the firm an incentive to improve its existing services, even if it says it’s committed to doing so.

“That there’s a thought that maybe this time it’ll be different is just ridiculous,” said Lawson.

Democratic strategist Ben Tribbett, who also signed the letter, told The Intercept that his main concern is making sure that NGP VAN’s tools remain democratic. State parties contract with the Democratic National Committee to access NGP VAN tools, and every state has its own rules for whether it charges for NGP VAN or offers it for free, which can make its software inaccessible to smaller campaigns, like those for school board or local elections. NGP VAN offers its tools to local, state, and federal campaigns.

“Putting them at such a disadvantage is part of why we’re seeing the party do as poorly as they are in these smaller localities,” he said. “The idea of a private company being able to access that information for purposes of profit is really, really troubling. … I don’t think that when most of these laws were written, they ever envisioned a private company owning this on behalf of the party.”

“The idea of a private company being able to access that information for purposes of profit is really, really troubling.”

They’ve also seen private equity erode political tools before. Hustle, founded in 2014, provided peer-to-peer text messaging for progressive and Democratic campaigns. It helped boost Sen. Bernie Sanders’s 2016 presidential primary campaign and integrated its services with NGP VAN later that year. In 2018, Hustle received a major growth investment from Insight Partners, Google Ventures, and Salesforce Ventures, expanded rapidly, and then laid off 35 percent of its staff the next year. In 2020, it was acquired by Social Capital, a billionaire-founded technology holding company, and has since continued to operate in the campaign tech space, albeit at a different scale. While Hustle has continued to work for Democratic campaigns at the state and national level, last year it launched an initiative called “Hustle for Good” to boost its support for mission-driven nonprofits. Though EveryAction isn’t currently laying off staff, some progressive strategists think a similar evolution in core focus could be on the horizon.

Salsa Labs, an early email fundraising firm that EveryAction acquired last year, had been taken up by a new client as early as April 2020: Children’s Health Defense, Robert F. Kennedy Jr.’s anti-vaccine group, which continues to use the company’s forms and email tools.

“It’s correct that we are still working to move Children’s Health Defense from our platform,” Peterson told The Intercept. “They had an existing contract that our team is working to address.”

The acquisition of EveryAction is just one piece of a larger trend in the Democratic and progressive campaign tech world, said Murshed Zaheed, a former aide to the late Senate Majority Leader Harry Reid who now runs the public affairs firm Pacifica Strategies. Overall, Zaheed said, “the tech is at a very complacent space. There hasn’t been any innovation that’s a game-changing innovation.” Such acquisitions, Zaheed said, are “stifling desperately needed innovation in our space at a time when there’s so much stagnation.”

Apax Partners was co-founded by millionaire, venture capitalist, and major Democratic donor Alan Patricof and Egyptian-born British businessperson Ronald Cohen. The firm owns more than 100 companies and works in industries from health care to online auctions. Its investment arm, Apax Funds, is registered in the Channel Island of Guernsey, a tax haven with a standard zero percent corporate tax. Apax board member Ian Davis is the former managing director of global consulting giant McKinsey. An Apax partner was part of the group of inaugural advisers to Russia’s sovereign wealth fund, among executives from several other major private equity firms including Blackstone, TPG, and Apollo Global Management. China’s sovereign wealth fund invested $956 million to acquire a 2.3 percent stake in Apax Partners in 2010. In 2009, Apax sold stakes to investors from GIC, part of Singapore’s sovereign wealth fund, and Australia’s sovereign wealth fund, which sold its stake in the company last year.

Apax partner Jason Wright, who is a director on Bonterra’s board, gave near-maximum contributions to Republican Senate candidates David Perdue and Kelly Loeffler in November 2020, several weeks after they both lost their elections. That month, he also gave $5,600 to WinRed, the GOP fundraising platform. Wright previously contributed to committees for Democratic and Republican presidential candidates Hillary Clinton and Mitt Romney. In a statement after the 2021 merger, Wright and Apax principal Adam Garson, another Bonterra director, said that the “resulting scale and connectivity between donors and non-profits will help reshape philanthropic giving.” A spokesperson for Apax, who declined to comment on the record, said Wright’s role at Bonterra was in oversight and that he had no operating control.

“If progressives want to build power, they have to take really seriously protecting the tools that we have that allow us to even play with concentrated and organized money,” Lawson said. “They have money, we have people. But if the tools that we use to reach people are acquired by money, then they have money, and they have people.”

The post Democrats’ Major Campaign Tech Firm Shifts Under New Private Equity Owner appeared first on The Intercept.

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