In one of the bigger tech-related fundraising rounds that the Portland area has seen over the past year, Beaverton, Ore.-based marketing automation software company Act-On today announced $42 million in new financing.
Act-On builds cloud-based software that helps businesses of all sizes manage their marketing efforts across various categories from e-mails to analytics to SEO. Today’s round, led by Technology Crossover Ventures with participation from Norwest Venture Partners, Trinity Ventures, US Venture Partners, and Voyager Capital, pushes total funding for the 270-person company to $74 million.
CEO Raghu Raghavan founded Act-On in 2008 after he saw huge potential for a sophisticated but affordable SaaS marketing tool that mid-market companies could easily use. He already had a wealth of experience in the industry after founding a similar startup, Responsys, which was acquired by Oracle for $1.5 billion in 2011.
But with his new idea, Raghavan had figured out a way to use cheaper technologies while building a more robust marketing tool for companies. There were also two other differences: Marketing execs were more comfortable with placing their data in the cloud than in years past, and a bevy of late-adopting companies were now showing interest in a tool like Act-On.
Raghavan noted an “enormous greenfield market” developing — which could reach $1.2 billion this year — that includes thousands of small and medium-sized businesses who are starting to adopt cloud-based software to improve their internal business processes.
“The new generation that is arising with marketing automation today is very much around companies using marketing to drive leads and increase revenue,” he told us. “Being able to automate sequences of marketing is crucial to all of that.”
Raghavan founded Act-On in 2008, which was a few years later than competitors like Marketo, Hubspot and Pardot. But he describes this as a “Last Mover Advantage,” since the company was able to learn from the successes and failures of earlier market entrants.
“We didn’t want to chase the people already in the market,” he said. “We wanted to be where we saw the market going.”
Act-On, which makes money off contracts that range from $500 to more than $6,000 per month, now has more than 2,000 customers — a number that has doubled in the last 18 months. Revenue grew to $23 million in 2013, up from $9.2 million in 2012, and Raghavan expects the company to file for an IPO sometime in the next 18-to-24 months.
“This is not a market limited by competitors,” he said. “This is a market where our success is driven by our own efficiency.”
Erik Benson, managing director at Voyager Capital, compared Raghavan to SNUPI co-founder and serial entrepreneur Jeremy Jaech — “both are repeat founders who have started and built large, successful companies,” he noted. Benson also explained why Voyager has invested in Act-On since 2010, when it led the company’s first venture round.
“While there were other similar companies in the Seattle market such as Optify, we felt the combination of a very experienced entrepreneur, huge market opportunity (some say over $5 billion), a scalable go-to-market team and strategy, and few lasting competitors would come together to build a company of lasting value,” Benson said.
The fresh funds will be used to help spur Act-On’s own sales and marketing efforts, in addition to building out its product team and adding 100 more employees in 2014. The company, which has seven offices in three continents, will also expand internationally — first to Europe, and then to Australia and New Zealand.