GovDelivery becomes unit of Internet Capital Group

The investment firm Internet Capital Group has joined with the management team of GovDelivery Inc. to buy out all other shareholders of the company.

The ownership change will retain the GovDelivery management team while providing the company with additional support and resources to continue to expand, according to a GovDelivery announcement today.

ICG paid $19.7 million for an 89 percent stake in GovDelivery, according to an ICG news release on the deal.

GovDelivery, of St. Paul, Minn., with offices in Washington, D.C., and London, pioneered the government-to-citizen digital communication market and was an early proponent in helping governments embrace software as a service (SaaS) and social media.

Company officials said GovDelivery is now experiencing rapid growth thanks largely to the federal government’s embrace of social media and cloud computing to improve open government and reduce costs.

More than half the major federal agencies use GovDelivery’s platform, which also is used by state and local government organizations in more than 30 states and by local government authorities in the United Kingdom, the company said.

In September 2009, GovDelivery acquired GovLoop, a social network for the government community that now includes more than 20,000 members.

“ICG offers unparalleled expertise in growing software as a service companies and shares our management team’s vision for expanding our capabilities and leadership position,” said Scott Burns, co-founder and chief executive officer of GovDelivery.

Founded in 1996, Internet Capital Group, of Wayne, Pa., acquires and builds Internet software companies that drive enterprise productivity and reduce transaction costs.

Other holdings include Metastorm Inc., a Baltimore-based business process management company, and ICG Commerce Holdings Inc., a procurement services and sourcing company.

GovDelivery retained Craig-Hallum Capital Group LLC as its financial adviser and Faegre & Benson LLP as its legal adviser on this transaction.