HubSpot Hits $100M Raised, Moves Closer to IPO (or Acquisition)

11/5/12Follow @gthuang

A well-known Boston tech startup has just joined the $100 million club. In total venture funding, that is.

HubSpot, the Cambridge, MA-based Web marketing firm, has closed a $35 million growth round, with participation from new investors including Altimeter Capital, Cross Creek Capital, and a large undisclosed institutional investor, along with previous venture investors. HubSpot’s VCs include Matrix Partners, General Catalyst, Google Ventures, and Sequoia Capital.

By my count, the company has raised a total of $100.5 million. That puts it up there with the likes of Wayfair ($165M), Jumptap ($121.5M), and Exagrid Systems ($103M), to name a few other big Boston-area bets. HubSpot is the youngest of the group, having started in 2006. The company has about 400 employees and is looking to add 50-some more by the end of the year. Recently, it has been talked about as both a potential acquisition target and an IPO candidate.

The question is, why raise another round now? Brian Halligan, HubSpot’s CEO and co-founder, says the money will be used to acquire customers more quickly, expand operations in Europe (its Dublin office will open in January), and make some acquisitions, possibly of marketing tech companies in the Boston area. He also points out that HubSpot’s newest backers also invest in publicly traded companies, and that his firm is starting to operate more like a public company itself, in terms of staffing and internal procedures.

“We don’t need the cash,” says Halligan (pictured at his desk). “Business is going well, and we want to invest in the growth of the company.” As an indication of progress, the firm is now on an annualized run rate of $60 million (based on the most recent month), he says, and its revenue is up about 85 percent over last year. Something like 8,000 businesses worldwide use its products.

HubSpot recently released an overhauled version of its marketing software (called HubSpot 3), which helps businesses get found on the Web, track their sales leads in a personalized way, and better understand their customers’ online behavior. As Halligan puts it, modern marketing tech is a hodge-podge of things like content management, blogging software, e-mail marketing, database management, and social media.

“We want to be the glue between each of those parts,” he says. “We want every website to be more like It’s tricky to do with a bunch of point solutions.” What HubSpot continues to work on, he says, is “a big, hairy software development project.”

Last year, the company bought Boston-area startups Performable and oneforty. The acquired talent—David Cancel, Laura Fitton, and their respective teams—has been instrumental in helping HubSpot develop new products and technologies, Halligan says. Indeed, those moves were “some of the best decisions we’ve made,” he says.

Halligan sees HubSpot as being part of a growing marketing cluster in Boston that includes established firms like Constant Contact (NASDAQ: CTCT), Demandware (NYSE: DWRE), Brightcove (NASDAQ: BCOV), and Unica (now part of IBM).

While the region’s tech companies dominated the minicomputer industry a few decades ago, he says, they missed the PC revolution, lost their lead in networking, and are starting to lose the greater enterprise software game—all to Silicon Valley. “I see a chance to dominate the technical marketing industry,” he says. “What’s really going to piss me off is if Silicon Valley beats us at our own game.”

As Halligan explains, the traditional Madison Avenue approach to marketing is in decline. So there’s a huge opportunity to innovate in the sector. “You have to match the way humans really buy stuff,” he says, meaning (increasingly) online and mobile. To that end, HubSpot wants to be the dominant force in next-generation online marketing.

It’s debatable whether the company has to go public to do that. Halligan says there are a couple of reasons why it would want an IPO: liquidity for employees and investors, and to “use the currency to do stuff.” But that must be balanced against the regulatory pains of going public.

In the meantime, the company and its board would presumably entertain any serious acquisition offers—but the price of HubSpot just went up.

As for the timing of an IPO, Halligan says, “We could file now if we wanted.” But the company will most likely wait for another year or so, he says. “We want to go public, but our hair is not on fire.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at Follow @gthuang