Creating a European digital transformation champion

Cloudflight was formed in 2019, after DBAG Fund VII, advised by Deutsche Beteiligungs AG acquired majority stakes in Austrian Catalysts GmbH and Crisp Research AG, within the scope of a management buyout. Both companies had previously been owned by their founders. DBAG acted as co-investor in these transactions, using its own financial resources. Merging the two to form Cloudflight, the newly-created group has been supporting SMEs, public-sector authorities and corporate groups in implementing and accelerating their digital transformation ever since.

Both management teams were committed to finding the right successor to take the reins of their respective company. Another goal was to strengthen and expand the market position of the newly-merged group, for example by entering not only the German market, but also other European target markets. The ultimate objective? To create a European digital transformation champion. Potential for value creation was thus identified in the areas of market coverage, in expansion of the service and technology offering, and in internal process optimisation.

Dedicated recruitment measures were a must – to build up a team capable of handling and managing the expansion, and to ensure employee loyalty over the long term. 

Supported by DBAG, the Cloudflight management implemented a broad range of measures, including a loyalty-strengthening employee participation programme that enables all staff to benefit from the company’s value enhancement. In addition, the Cloudflight Coding Contest, first established in 2007, has been further strengthened to address new talent. The competition is one of the largest of its kind and challenges participants from 45 cities around the globe to compete in three different categories, either as an individual or as a team, and in a programming language of their choice. The aim of the contest is to increase the visibility of programmers and to raise people’s interest in programming. Around 50 per cent of Cloudflight’s new hires are linked to the Cloudflight Coding Contest.

DBAG and the management team also implemented a fresh corporate governance structure. Among the structural changes is a new Advisory Board that supports Cloudflight’s development by providing sector-specific know-how. Christian Federspiel, former Managing Director of Cloudflight, and Daniel Krauss, founder and CTO of Flix SE, are two of the Advisory Board’s members. DBAG further implemented its proprietary buy-and-build strategy, establishing the core value creation lever, and was able to lend Cloudflight its support, helping the company enhance expertise, its customer base and internationalisation, by drawing upon extensive M&A expertise. Cloudflight’s add-on acquisitions include Cognostics (AI-driven software development), macio (embedded software engineering and development partner for human/machine interface design), Divante (e-commerce technology) and mogree (holistic service provider for the digital transformation and AI-based solutions), each of which plays their very own part in enhancing Cloudflight’s all-embracing portfolio of services. These strategic acquisitions, and a rigorous approach to improving the technology and service offering, have created significant value and tripled revenues in only three years.

This was a good basis for DBAG, the management team and a renowned network of partners to pursue a European growth strategy which also contributes to the team’s expansion: Cloudflight customers gain access to a holistic portfolio of services, and software developers benefit from exciting areas of activity and attractive locations.

The investment in Cloudflight marked a milestone in DBAG’s activities in the IT services and software sector, which now accounts for 20 per cent of the portfolio. The most recent investment in AOE Group, a leading service provider for agile software development with a focus on customised business solutions, is DBAG’s seventh foray into this structural growth sector.

DBAG sold its investment in Cloudflight to Partners Group, a leading global institutional private markets investment manager, in November 2022. As DBAG and DBAG Fund VII continue to see strong opportunities for Cloudflight, they have partially invested their proceeds for a continued investment.