Cloudflight

Established: 2007

Country: Germany

Region: Bavaria

Investors: Deutsche Beteiligungs AG

Cloudflight, one of the leading full-service providers for digital transformation in Europe, has dedicated itself to nothing less than supporting enterprises in thriving as they become digital.

With more than 1,000 qualified staff in software development, cloud architecture, data science, and strategic IT, the company offers a holistic portfolio of services, ranging from consultancy to the development of customer-specific software and cloud-native AI and e-commerce solutions, right through to operations. In other words, Cloudflight covers the full range of smart services, helping its clients thrive in the transformation process towards digitisation.

We were particularly impressed by the team's entrepreneurial vision and the strong growth momentum in Cloudflight's market environment. We’ve managed to successfully leverage the team’s entrepreneurial vision and the strong market growth momentum to build a European champion. DBAG’s shareholders and fund investors are thus benefiting from our decision to increasingly focus on digital business models.

At Cloudflight, we differentiate ourselves through our broad technological capabilities, where we work with customers at every step of their digital journey from ideation through development to the operational phase. Cloudflight has enjoyed the strong development over recent years and the reliable partnership with DBAG, thus providing the basis for future growth. We are now on the trajectory towards continuing this exciting journey. This includes also exploring further expansion into other high-growth European markets.

Revenues tripled in only three years

~50%

of all new hires due to the Cloudflight Coding Contest

~26%

average annual growth expected in the market

Background

Cloudflight was founded in 2019, after DBAG Fund VII, advised by Deutsche Beteiligungs AG (DBAG), acquired majority stakes in Austrian Catalysts GmbH and Crisp Research AG, while performing a management buyout. DBAG has been a co-investor in these transactions and invested from its own balance sheet. The merged companies then formed Cloudflight. The newly created company has since been supporting small and mid-sized enterprises, public-sector authorities, and large businesses in both implementing and accelerating their digital transformation.

What were the main challenges?

Both management teams were committed to finding the right successor to lead their respective companies. Another goal was to strengthen and expand the market position of the newly merged company, for example, by entering not only the German market but also other markets in Europe. The ultimate goal? Creating a European champion that helps clients excel in digital transformation. Potential value-enhancing opportunities were identified in the areas of market coverage, expansion of service and technology offerings, and internal process optimisation.

Dedicated recruitment measures were critical to building a team capable of managing the expansion and ensuring employee loyalty over the long term.

How did DBAG help to achieve these goals?

A variety of measures were undertaken; this includes, but is not limited to, a loyalty-strengthening Employee Stock Ownership Plan (ESOP) rolled out under the guidance of DBAG—a programme that enables all staff to benefit from the company’s value enhancement. Additionally, to attract talent, the Cloudflight Coding Contest was introduced. Established in 2007, the competition is now one of the largest of its kind, challenging participants from 45 cities across the globe. Contestants compete in three different categories using a programming language of their choice.

Furthermore, DBAG and Cloudflight management implemented a new corporate governance structure. This strategic change includes an Advisory Board that supports Cloudflight with industry-specific know-how.

DBAG’s proprietary buy-and-build strategy was one of the key levers in terms of value creation. DBAG supported Cloudflight in its M&A processes, helping the company enhance its capabilities, extend its customer base, and drive internationalisation. 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 digital transformation and AI-based solutions), each of which plays its own role in enhancing Cloudflight’s comprehensive portfolio of services. These acquisitions helped Cloudflight to improve its technology and service offerings.

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 reinvested their proceeds for continued investment.