Beacon Software Inc., a startup that buys and operates software businesses, has raised $225 million in a Series C funding.

The company stated in its announcement of the deal today that HarbourVest and General Catalyst were the lead inventors. The latter firm also backed Beacon’s previous $250 million round last November. The company’s total outside funding now exceeds $550 million.

Toronto-based Beacon was launched in 2024 by Nilam Ganenthiran, the former president of Instacart Inc., and venture capitalist Divya Gupta. It buys small, industry-specific software businesses that have either achieved profitability or are close to it. Beacon realizes a return on investment by boosting its portfolio companies’ financial performance.

The startup says that its EBITDA, or earnings before interest, taxes, depreciation and amortization, has increased by more than 50% in the past year. It closed more than a half-dozen acquisitions in that time frame.

Beacon’s portfolio companies compete in a broad range of segments. One of its most recent acquisitions is PowerUps Sports, which sells a platform that sports clubs use to build websites and manage match schedules. A few weeks earlier, Beacon disclosed that it had acquired RealStateAPI, which provides property data to insurers. It described the purchase as an eight-figure transaction.

It says it usually closes deals within 60 days of launching the acquisition process. Businesses that move under the company’s umbrella keep their brands and teams. Those businesses’ founders, in turn, gain access to resources that they can use to broaden the adoption of their software products.

The company manages back-office tasks such as accounting for its portfolio companies, which enables their staffers to invest more time in growth initiatives. Teams are given access to external go-to-market professionals and technical experts who can help improve their products. Furthermore, it provides capital for acquisitions. 

Artificial intelligence plays an important role in the startup’s portfolio company optimization strategy. Beacon offers domain-specific datasets that software teams can use to enhance their products’ AI features. Earlier this year, it partnered with OpenAI Group PBC to make AI training resources available to its portfolio companies’ customers.

“The cost of writing high-quality code is decreasing, and we believe that presents a generational opportunity to modernize the technical infrastructure of the underserved industries that account for more than 55% of the U.S. GDP,” Ganenthiran said.

Beacon will use the proceeds from the round to enhance its AI capabilities and buy more software businesses. The company disclosed today that it closes one acquisition per week. 

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