Content Marketing Platform Helps Kapost Raise $5.6M Series C Round

7/18/13Follow @MichaelXBD

First things first: it’s Kapost, pronounced like “kaboom.”

The idea of blowing up—but only in the good way—seems apt, following Kapost’s announcement Thursday that it has raised a $5.6 million Series C round.

Boulder-based Kapost has raised $8.2 million the past three years and develops content marketing software. Basically, it’s a robust content management system that gives advertisers and marketers the advanced tools used by media companies to create and program online content, co-founder and president Mike Lewis said.

As you’d expect, Kapost integrates with the major publishing platforms and social networks to publish articles, social media, videos, and whatever else. But an important part of Kapost is its ability to manage the content creation process from idea to first draft to final post by enabling users to plan, assign, and schedule posts. User analytics tell publishers what content is delivering results.

Kapost originally was targeting large media companies, but when the startup began building its client base, it noticed something unexpected happening—advertising firms and marketing departments were also making inquiries.

“We were signing up a lot of media companies, like [newspaper publisher] Gannett and CBS, but over time we saw brands signing up, and we couldn’t figure out why,” Lewis said. “But as it started to happen more regularly, [we realized] it was brands that do a lot of content as part of their marketing strategy. They wanted to become publishers like CBS or Gannett.”

Why would advertisers want to become like the media companies they were running away from when it comes to spending money on ads? They are becoming publishing companies in their own right, emphasizing original posts and videos, along with presentations, webinars, and white papers over display ads, flashy sites, or Google AdWords.

The premise is a steady flow of fresh content keeps consumers engaged and informed and highlights a company’s products and expertise. A good example is Kapost’s own site.

But producing and managing content on that scale creates new challenges for marketers who need the type of tools new and old media companies have utilized for years to produce dozens of articles or videos everyday.

Kapost put everything together and realized its future was with companies outside the media industry. Now its clients include Intel, AT&T, and Oracle.

“There are a lot more brands, and it’s a better business,” Lewis said.

Kapost is off to a solid start. It formed in 2010, went through TechStars that year raised a $1.1 million Series A round that September.

The shift to marketing came in late 2011 and has been paying off. Lewis declined to share numbers, but he said revenue has doubled so far this year and is projected to double again by the end of the year. Kapost has been turning a profit, although that will probably change as growth becomes the priority. Lewis said Kapost is likely to grow from 20 to 35 employees by the end of the year, and reach 50 employees in 2014.

Lewis said Kapost has caught a few breaks during its history that have helped it grow. The pivot toward marketing didn’t require a drastic overhaul of the product. It also found itself in a niche without direct competitors, at least for now.

“We didn’t actually change the software at all, we just changed who we were marketing to,” Lewis said. “When content marketing became a thing, we had the software already built. We just rebranded it. We got a good jump and head start in the industry.”

In the past year Kapost has added several new features and can distribute presentations, webinars, and white papers along with traditional content. It now integrates with marketing automation platforms Marketo and Eloqua, along with social networks, the major CMS platforms, and Salesforce.

Kapost’s round was led by Lead Edge Capital and Floodgate. High Country Venture, a prior investor based in Boulder, also joined the C round.

Kapost and its investors have reason to set their sites high.

Companies that develop marketing software have being striking it rich lately. Marketo (NASDAQ: MKTO) went public in May and now is worth $895 million, while Oracle (NYSE: ORCL) purchased Eloqua last December for $871 million. The companies are Kapost clients.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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