Covington-based Netchex, a 20-year-old company that provides online payroll and human resources services to more than 6,400 clients across the U.S., has been acquired by a New York-based private equity firm, GrowthCurve Capital, marking the latest successful purchase of a homegrown tech startup by national investors.
Terms of the deal were not disclosed. But Netchex, which has annual revenues of more than $50 million, will keep its headquarters on the north shore, where it has been located since friends Will Boudreaux and Stu Ethridge founded the company in 2003.
Both Boudreaux and Etheridge, who retained an ownership stake in Netchex, will remain in executive positions with the company. Netchex’s 340 employees, some 200 of whom are based at the Covington office, also will remain in their current positions, Boudreaux said.
But the investment GrowthCurve, which was founded in 2021 with $1.1 billion in capital, will enable Netchex, to expand its footprint, develop new data analytics products and launch new business lines, Boudreaux said.
“This will really be a new chapter for us,” Boudreaux said. “This will enable us to grow bigger and beyond.
The acquisition is the latest successful “exit” for a New Orleans-area startup. In September 2021, construction software company Levelset was purchased for $500 million. The next month, data analytics company Lucid sold for $1 billion.
While those deals were presumably much larger than the Netchex deal, GrowthCurve’s investment in the company speaks to the strength of the metro area’s entrepreneurial ecosystem, according to local economic development officials.
“This is a tech company started right here in our back yard,” said Chris Masingill, CEO of St. Tammany Corp., the parish's economic development agency. “They are truly one of those model examples that we turn to when we talk about how people can start businesses, scale businesses and grow to be extremely successful."
Timing was right
Experts might not have bet on Netchex when Boudreaux and Etheridge were starting out in 2003. At the time, the national economy was still reeling from the dot.com crash and the idea of providing financial services on the Internet seemed risky.
But their idea was solid, and, it turns out, the timing was right. Netchex got into the industry as a growing number of companies were outsourcing their financing and accounting services to cloud-based providers.
In its first year, Netchex did more than $600,000 in sales. The growth has been non stop ever since. Today, in addition to its core services, such as payroll, direct deposit and tax management, Netchex’s software helps clients with recruiting, getting employees onboard, managing timecards, enrolling in benefits, performance reviews and training.
The company currently has offices in Baton Rouge, Jackson, Mississippi, Atlanta and Dallas.
With GrowthCurve’s investment, the company will likely create hundreds of new jobs over the next three years in Covington and beyond, Boudreaux said.
"As a technology-enabled services company, developers, IT staff, and quality assurance professionals are going to be needed to support our future growth,” Boudreaux said. “Additionally, we have a tremendous support staff that services thousands of clients nationwide.”
Upside potential
GrowthCurve isn’t the first private equity firm to invest in Netchex. Primus Capital, based in Cleveland, invested an undisclosed amount in the company in 2016. That investment fueled a lot of Netchex's growth in recent years, Boudreaux said.
GrowthCurve did not return calls seeking comment. But in a prepared statement the company said it was attracted to Netchex because of its successful track record and potential for growth.
"We look forward to partnering with Will and the rest of the management team to accelerate Netchex’s growth," said Matthew Popper, head of technology and information services investing at GrowthCurve.
Editor's note: This story has been updated to correct St. Tammany Parish CEO Chris Massingill's first name.