HubSpot Gets $16 Million to “Put Mass Behind SaaS”; Marketing Automation Company Has Plans to Go Public, CEO Says

10/19/09Follow @wroush

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$250 a month for small businessees and $9,000 to $12,000 a year for larger businesses.) That means “you are essentially financing your customer forever,” Halligan says. And since all of a SaaS company’s software lives on its own servers, “you also have to build a bullet-proof back end,” he says.

To do all of that, the 100-employee company plans to get “a lot bigger,” Halligan says. “To compete with our vision of this modern marketing platform akin to SalesForce.com, we need to invest in R&D…The sound bit is that we’re going to continue to invest in hiring in the Cambridge and Boston area across the board, with a lot of research and development heads but also some marketing heads, recruit and sales heads, and services heads.”

Halligan said HubSpot was attracted to Foster City, CA-based Scale Ventures in part because of the firm’s understanding of Software as a Service business models—the company was an investor in Web measurement firm Omniture, which was recently acquired by Adobe, as well as Exact Target, an on-demand email marketing startup.

Scale isn’t a name that you often see attached to Boston-area funding rounds. “The reason you don’t hear much about them is that they primarily do Series C type investments, where as the Sequoias and Kleiner Perkinses will do early stage investments,” says Halligan. “But they are becoming real SaaS experts out in the Valley, and they understand that you need mass behind SaaS to make the metrics work. They drilled deeper than anyone else when we met into our spreadsheets and our economic models.”

HubSpot has roughly 1,500 clients, and is located in the Cambridge Innovation Center in Kendall Square. Its most recent funding round prior to today’s announcement, a $12 million Series B round, closed in May 2008.

Halligan plans to discuss the Series C round in a live-streamed Internet session today at noon.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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