Private equity investment firm Kohlberg Kravis Roberts & Co. (KKR) became the majority shareholder of Alchemer (formerly SurveyGizmo) last month. Founded in 2006, Alchemer initially provided an online survey software platform with analytics features for users to distribute electronically. Now, their inventory has expanded to include voice of customer (VoC), CX automation, and various other products and services.
This is the first investment of the new KKR Ascendant Initiative, a $5 billion mid-market fund focusing on companies with enterprise values of under $1 billion. Looking at G2 data and KKR’s investment portfolio, we can analyze how this injection of capital could affect Alchemer’s sprint for market dominance and how KKR’s financial support has influenced or benefitted the performance of their investments.
Understanding KKR’s impact on Alchemer’s future
KKR has a history of investing in tech companies since 2015. They have 30 businesses in their tech growth asset class portfolio with products ranging from online driving training, event planning analytics, and supply chain planning to game publishing. Of these tech companies, 21 are listed on G2, and 12 of them have enough product reviews to have appeared in a G2 report.
There have been two direct actions since KKR’s investment in Alchemer. The influx in capital helps with Alchemer’s marketing, product innovation, industry partnerships, and strategic mergers and acquisitions. The second has been implementing the employee ownership initiative, which reforms the company structure into a partnership where both KKR and employees are owners of Alchemer. KKR’s strategy is to cultivate a strong sense of employee engagement, seeing it as instrumental in building a stronger company.
G2 data reveals the possible implications of this investment
G2’s database of reviews records users and client satisfaction with the products they purchase. Analyzing the G2 reports, we can measure the performance of the invested products before and after KKR’s investment date. Alchemer was named a Leader in G2's Spring 2022 Grid® Report for Survey Software, and Alchemer EFM was named a Leader in G2's Spring 2022 Grid® Report for Enterprise Feedback Management Software. However, looking at the ranking trend of Alchemer, it seems that they have been slowly pushed out of the top 10 by additional competitors rather than degradation in product quality.
With events like SAP acquiring Qualtrics, Qualtrics International, in turn, acquiring Clarabridge, Usertesting acquiring Usermuse, and Zendesk’s attempted acquisition of Momentive.ai (formerly Surveymonkey), the competition is only accelerating. Alchemer’s competitors are rapidly expanding their product options and increasing the number of features offered with each package. The new capital provided by KKR will give Alchemer the funds they need to remain competitive.
KKR’s proven portfolio of investments
G2 data shows that the strongest investments of KKR have been KnowBe4 and Outsystems, with both products continuing to be the Leaders in their respective categories. To a lesser degree, the most rewarding investments were ContentSquare and Artlist, where their G2 rankings have experienced a steady rise among their user base. Rainfocus, ForgeRock, and DarkTrace Enterprise Immune System have experienced declining customer Satisfaction and Market Presence in the last six to seven quarters.
Alchemer’s products have consistently held strong positions against their competitors in the Survey and Enterprise Feedback Management (EFM) categories. Given Alchemer’s strong position before KKR’s investment, KKR’s funding is what Alchemer needs to accelerate past their competitors and catapult Alchemer back into a top 10 Contender in the Survey Software category.
What does this mean for the future of customer experience software?
KKR’s decision to acquire Alchemer shows an underlying current affecting the customer experience industry. Since the pandemic of the last two years, consumers have migrated to e-commerce platforms, and customer experiences have migrated mainly online. Suddenly, many traditional methods of capturing customer feedback like customer interviews, social listening, focus groups, on-site surveys, etc., became inaccessible to businesses scrambling to adapt to the new normal. Companies that have not adopted survey, EFM, or experience management software found themselves blind to the frustrations and opportunities voiced by customers, impacting their ability to remain competitive in a market defined by pandemic restrictions.
This forced transition to the virtual marketplace has created a deluge of untapped customer experience data ripe for capitalization by survey or EFM platforms like Alchemer. Given this context, KKR’s acquisition is a strategic decision that places itself in an increasingly competitive customer experience industry. Necessity is the mother of all inventions, and the pandemic has created a need that only customer experience software products can meet. We should continue to see innovations in this field followed by increasing attention from well-established and financially influential investors.
Jeffrey is a research analyst at G2 with a focus on Customer Service software. Prior to joining G2, he has performed academic research studying the effects of narratives on beliefs and worked as Human Resources for Amazon. In his free time, he spends time with his cat, playing video games, and visiting museums.