Over roughly the last two years, a company called Beacon has quietly acquired more than 40 software businesses serving market segments from campgrounds to labor unions to youth sports organizations.
Beacon Software spruces up its portfolio companies’ offerings with the help of artificial intelligence, says founder and CEO Nilam Ganenthiran. That can mean adding AI features, modernizing software tools developed over decades, and using Beacon’s AI and data management software to aid in operations and planning. The goal is to serve Main Street-style businesses and other organizations that he says are often neglected by the enterprise-focused AI industry.
“We think that it is existential that they get AI at the same rate that the rest of the economy does, but today they’re not,” says Ganenthiran, who previously served as president of Instacart. “They are often being forgotten by the big labs and the large behemoth technology companies.”
Beacon is one of a number of companies focusing on what’s called an AI rollup strategy, acquiring businesses that investors hope can be made more efficient and profitable by deploying AI. In some cases, that’s meant using AI to speedily retool aging software products based on input from customers. At other times, that’s meant adding AI features to products themselves, powered by data lake technology deployed among Beacon businesses.
It’s in some ways a high-tech take on the traditional (and often controversial) private equity move of acquiring businesses in order to improve the bottom line through technical and strategic improvements. But unlike traditional private equity firms, Beacon—which announced a $225 million Series C funding round in June—aims to hold its portfolio companies for the long term and focuses on growth rather than cost-cutting, Ganenthiran says.
Its portfolio companies collectively have higher head count than they did at the time they were acquired, and 75% are still led by their original founders, with other founders having left via planned retirement, he says.
Beacon portfolio companies include sports club software businesses E2E Soccer and PowerUp Sports, college admissions planning software company College Kickstart, and multiple businesses serving campgrounds. The businesses collectively bring in hundreds of millions of dollars in annual revenue, and company founders’ human expertise can be invaluable to understanding those disparate market segments, Ganenthiran adds.
“At the end of the day, what we’re buying is the founders’ knowledge, trust, and everything that is in their brain about how these niches of the economy work,” he says.
And on September 17, Beacon announced an acquisition of a different sort, buying the New York-based AI training and safety company Haize Labs to help augment its internal AI platform, with Haize cofounder and CEO Leonard Tang joining Beacon as VP of AI research. Tang and his team will help build company-specific AI agents and sophisticated “world models” that can help with strategy while ensuring the technology behaves in a way that’s predictable and actually useful.
“The average Beacon business is about 15 years old, meaning they have collected customer love and trust over more than a decade,” Ganenthiran says. “And you don’t want to break that trust by pushing AI into the system that does something that is unexpected or even worse, unproductive or toxic.”
The company also aims to train its own AI models based on its accumulated data, Tang says, though he emphasizes Haize Labs’ expertise will ensure various safeguards meet long-term users’ “trust constraints” and prevent unwanted AI behavior such as marketing agents spamming contact lists.
Haize previously worked with major AI labs including OpenAI and Anthropic, and it also offered a program called FreeAINYC, embedding with New York businesses to help them develop custom AI solutions for their particular problems. Already, Tang has been at work with some Beacon portfolio companies doing similar work, including helping the labor-union election software company TrueBallot migrate to the cloud and improve its onboarding and ballot-counting operations. Such efforts also help gather knowledge to improve the core AI product, meaning it can handle more of what Beacon portfolio companies need in the future, Tang says.
“So, on an ongoing basis, you no longer need to send Beacon’s engineers on-site,” he says. “You just get that capability out of the box.”
Beacon declined to share details about the financials of the Haize deal or its other acquisitions. But Ganenthiran says its rapid pace of purchases has given it access to information and a customer base that help make its AI and other systems that much more efficient going forward.
“Each incremental company we buy gives us access to a set of customers that we get to know and serve, that then give us access to workflows and data that make the entire system more powerful,” he says.