EQT adds GotPhoto to portfolio in volume photography play

EQT has agreed to acquire a majority of GotPhoto from its founders, angel investors and management team, the firm will announce later today. The investment is a play to gain exposure to a firm in a part of the photography business that has been slow to digitize but whose platform Dominik Stein, partner in the EQT growth investment advisory team, believes could soon snap up interest beyond its core market.

Stein did not disclose the exact size of the investment, but told PE Hub Europe that €100 million ($108 million) was a “good ballpark.” The investment, which includes additional primary capital, came from the Stockholm-headquartered private equity firm’s growth fund, which has total commitments of €2.4 billion. The founders, angel investors and management team will remain minority owners.

Founded in 2012 and headquartered in Berlin, GotPhoto is a “one-stop shop for photographers,” said Benedikt Greifenhofer, CEO of the firm, offering services such as workflow and photo management.

It has focused on the volume photography business, which has had lagged other parts of the photography market in moving to digital, according to Stein and Greifenhofer.

“We see it a lot in vertical markets,” said Stein. “Horizontal markets get a lot more attention and spend.”

The company had so far been bootstrapped, but that has led to 50 percent year-over-year growth over the last five years, according to a press release. That has come mainly by winning share from legacy solutions.

Those legacy solutions – typically non-digital – as well as the high level of fragmentation in the market means there is strong growth potential for the sector, with EQT estimating that the underlying core market will grow 24 percent year-over-year through to 2027.

“This is a very interesting market,” said Stein. “There is huge digitization potential. There is huge potential penetration in a fragmented market. It’s not a huge company yet but it’s by far the market leader, and we can accelerate growth.”

Bread and butter

GotPhoto has over 4,000 customers, according to the release, mainly small to medium-sized businesses and solopreneurs. They work in the volume photography market – such as school photos – of which much still operates via pen and paper.

“The dynamics of digitization started in consumer, personal and wedding photography,” said Greifenhofer. Many photographers have looked down on the volume business as being “bread and butter,” he added.

Digitizing the volume business has also been a far harder task, he added. “Take a wedding – it’s one client, one session, one fee. Multiply that by 1,000 and you have volume photography.”

Marketing, password control, data protection all have to be covered by the system.

“Over the last five years we focused a lot more on volume,” said Greifenhofer. “We had a clear focus on that market and disrupted it.”

Now that the system is in place, and with EQT’s backing, GotPhoto can look at expanding into those other markets, Greifenhofer added. Some of GotPhoto’s customers are already in other sectors, such as sports.

The firm has a lot of organic growth to capture in its main markets of Germany, the UK and the US, said Greifenhofer. It would also like to grow in Asia and Europe, while inorganic growth would be focused on acquisitions that can enhance the company, rather than buying out competitors.

Those add-ons could involve photo editing and artificial intelligence. “But when and how is up to the market,” said Greifenhofer.