Google Ventures, Sequoia, Salesforce Lead $32M Financing Round for HubSpot

3/8/11Follow @wroush

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become shareholders, despite the fact that they are in Cambridge. Brian and Dharmesh have one of the hallmarks we look for in entrepreneurs—they have personal pain and passion around solving that pain. We think they will help us become shareholders in a company that is public and independent and massive in scale.”

Rich Miner, a Cambridge, MA-based partner at Google Ventures, said he’s been “continuously impressed” by HubSpot’s performance over the last several years. “Google knows and I know just how large the small- to medium-sized business marketplace is, and how underserved they are by tools that help them get from the world of traditional marketing to a world driven by Google and other ad platforms as well as the swell of social media…HubSpot delivers those tools and brings together support for search, blogging, and social networking and helps these SMBs start to understand that world.”

HubSpot says it plans to use the new cash to increase its lead in marketing software, though part of the money will also help to “provide liquidity to some existing shareholders,” according to today’s announcement. (This was evidently a reference to individual investors, as all of the company’s previous venture backers reenlisted for the Series D round.)

In 2009, after HubSpot’s $16 million Series C round, Halligan told Xconomy that the company hoped to go public and implied that it wouldn’t need much additional venture funding to get to that point. “When you look at companies like SalesForce.com and NetSuite and Constant Contact and OpenTable, the average amount they raised [before going public] was $40 million,” Halligan said then.

In remarks today, Halligan said HubSpot hadn’t been planning on raising more venture cash until he met Sequoia’s Goetz in December 2010. “He was very aggressive and spoke to me about the fringe benefits of being part of Sequoia’s portfolio, which includes a lot of knowledge transfer and mentorship. I got pretty excited about that, and then went and talked to my friends at Google and Salesforce. We weren’t planning on raising another round, but we have put the perfect trifecta of investors together to do this deal.”

In addition, Halligan said, the Web and software world is increasingly “winner take all,” with players like Google, Salesforce.com, VMware, and Zappos completely dominating their industries; HubSpot needed a big cash infusion to ensure that it can win in the software marketing world, he argued. With an annual run rate that’s still only at the $25 million level, the company isn’t big enough yet to go public, though that is still the eventual intention. “We are ahead in this interesting new market, and the terms seemed reasonable based on what’s going on in the private equity world, so we said let’s double down and take a round,” Halligan said.

Shah said that HubSpot currently has 192 employees, with 10 more coming on board in March, and that the company will “continue to be very aggressive” about hiring. The company is hiring in all departments, but the focus is on product developers, designers, and QA testers who can help “get the product even farther along,” Shah said.

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

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  • http://www.usamagnum.com Philip

    I wonder why Hubspot is looking to hire a Business Development Executive that will coldcall businesses – the job description says “We have an opening for Business Development Representatives (BDR) who will call into organizations and introduce HubSpot to Marketing decision makers.”

    It further goes to say that Major responsibilities include “High volume prospecting (telemarketing) for qualified leads; between 60 and 80 calls per day” and that they are supposed to generate “leads” – “You will be required to provide leads and schedule product demonstrations for your sales partner”

    See the ad here – http://jobs.hubspot.com/business-development-representative/

    Your article says “HubSpot’s basic message to other companies is that going out and finding customers the old-fashioned way—using “interruption”-based methods such as telemarketing and unsolicited e-mails—is less effective than helping customers find you by creating compelling, search-engine-friendly Web content”

    Far from being a competitor, I am a Hubspot customer. It looks like Hubspot does not believe in its own product to do a 100% job. I can understand the need for telesales to follow up on leads generated from contact forms, but it seems clear that Hubspot wishes to use telesales to “create leads” and introduce Hubspot.

    Wonder why?

    Philip John
    http://www.usamagnum.com

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