Intuit to acquire Demandforce for $424m; SaaS for SMBs

Intuit, the firm behind TurboTax and, will purchase San Francisco neighbor Demandforce for $425.5 million in cash. The target: small- and medium-sized businesses.

Intuit, the San Francisco firm behind TurboTax and, announced this morning that it will purchase neighbor Demandforce for $423.5 million in cash.

The company's D3 web-based software-as-a-service product aims to help small and medium businesses automate marketing and customer communications with the ultimate goal of improving reputation. The company says it has "thousands" of customers, such as medical and dental offices, spas and salons and automotive (body, tire, dealer) shops.

Demandforce plays into Intuit's connected services portfolio and gives it more play within the SMB market. SaaS is what Intuit is all about in recent years, and Demandforce helps it keep its core audience happy -- and perhaps gain a few new customers in the process, too. The key word here: local.

Benchmark Capital's Bill Gurley elaborates in a blog post:

The combination of Internet pervasiveness and smartphone penetration has led to a complete reconfiguration with regard to how local businesses interact with their customers. These local businesses have traditionally spent over $125B/year on traditional media, and this is only in the U.S. But the channels they have historically used, such as the newspaper and the yellow pages, are increasingly compromised. These business owners know they need new solutions, and these dollars will be reallocated to these exciting new platforms. Benchmark believes this “Local Internet” wave is many times larger than the “social” and “mobile” themes with which it is often contrasted.

Benchmark is Demandforce's largest investor; Gurley sits on the startup's board. The VC firm is known for its investments in OpenTable, Zillow, Yelp and GrubHub.

Demandforce will become a new division in Intuit’s small business group; it will continue to be led by founder Rick Berry, who will report to Intuit SMB GM Kiran Patel.

"With a compelling customer value proposition, SaaS model and high growth profile, Demandforce will provide opportunities to grow Intuit’s customer base and revenue per customer over time," Patel said.

The deal is expected to close in May.

Here's a primer on the company's main product:

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