Smartsheet Lands $26m From Insight, Madrona For Online Collaboration

12/3/12Follow @bromano

Smartsheet, which makes spreadsheet-based online collaboration tools, is six years old but chief executive Mark Mader says “we’re operating as a two-year-old company.”

And now, a very well-funded two-year-old thanks to a $26 million investment from Insight Venture Partners and Madrona Venture Group.

Two years ago, Smartsheet pivoted not to a new business, but to a redesigned product meant to be familiar and easier to use. It has since gained significant traction for its software-as-a-service suite of shareable online spreadsheets: Smartsheet counts more than a million users at companies including DHL and MetLife. People can share all or part of a spreadsheet inside or outside an organization; store and share other files within the sheets; and, use task lists, calendars, Gantt charts, and other templates for project management and other business operations.

The company amassed nearly all of its current customers with no salespeople (it didn’t hire any until earlier this year). The financing gives Smartsheet scope to hire up to 100 people in the next 18 months in sales and marketing, distribution, and product development, as it targets enterprise customers, Mader says. The Bellevue, WA, company currently has 40 employees.

It achieved positive cash flow last year. Mader wouldn’t disclose revenue, but did say growth is in the triple digits.

“We see a huge, global opportunity to be highly disruptive in the online collaboration space,” Mader says, adding that the majority of companies are just beginning to deploy cloud-based applications and it’s up to the application providers to make that experience as smooth as possible.

Mark Mader

Smartsheet points to a Forrester assessment and blog post in which analyst TJ Keitt asserts that the online collaboration “market is rapidly evolving into the collaborative backbone of mobile, distributed business ecosystems.”

Smartsheet has in its crosshairs the “old guard,” by which it means the emailed Excel spreadsheets that the “vast majority” of people are using to manage work such as product and sales planning, operations, and human resources functions today, Mader says. “The competitor is and remains the way people have done it.”

But lots of companies—startups and established vendors alike—see the opportunity to offer a new way, updated for the cloud.

As co-founder and chairman Brent Frei sees it, several different approaches to collaboration are emerging: team task-management as championed by Basecamp and Asana, along with scores of different online project and task management apps (see a new offering from Seattle TechStars grad Sandglaz); the Facebook-for-the-enterprise plays such as Yammer and Jive Software; online file management solutions, which Frei deems more complementary than competitive to Smartsheet; and countless purpose-built tools that track a single aspect of business such as hiring or marketing campaigns.

He asserts that Smartsheet’s approach of melding the familiarity and flexibility of the spreadsheet with online and mobile collaboration is unique.

Insight Venture Partners principal Ryan Hinkle is joining the Smartsheet board.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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