HubSpot Dips Toe Further Into Startup Investing With Sigstr Deal

HubSpot is ramping up its startup investments as part of a larger strategic effort to augment the capabilities of its sales and marketing software tools. Some of the young companies HubSpot backs may become its partners—if they’re not already—by integrating their services with the larger company’s.

The 12-year-old Cambridge, MA-based company made its first investment in a startup in May, when it contributed to a $10.3 million Series B funding round for Atlanta-based marketing software firm Terminus. That same month, HubSpot (NYSE: HUBS) was one of the backers of a $15 million Series B round for San Francisco-based PandaDoc, whose document management software is aimed at speeding up business transactions.

HubSpot’s latest investment is in Indianapolis-based e-mail marketing startup Sigstr, as part of a $5 million Series A round announced today.

HubSpot plans to continue pumping money into startups developing sales and marketing tools, and potentially other types of software and services, says chief strategy officer Brad Coffey (pictured above). (He didn’t elaborate on other possible investment areas.)

Corporate venture capital investments have been on the rise in recent years, although deal activity slowed last year, according to CB Insights data. One of the prominent corporate investors in the sales and marketing software sector is Salesforce, which earlier this year announced it was putting $150 million into two new in-house venture funds. Salesforce previously pumped $250 million into three in-house funds, according to its website.

It’s hard to tell how aggressively HubSpot is investing. Coffey declined to share how much money it has poured into its three deals. The company has not announced a dedicated venture fund, and Coffey wouldn’t comment on that possibility.

“We’re not quite ready to announce a size or target number of investments yet,” he says. “But I think you can start to see the momentum that we’re building here and project forward what we’re trying to do.”

HubSpot’s decision to enter the corporate VC fray is notable because the company, which has a market valuation of more than $2.5 billion, is a pillar of the Boston-area marketing and sales technology sector. It will be worth watching whether the investments ultimately boost HubSpot’s bottom line—and its stature in the broader industry.

HubSpot’s decision to move into venture funding is tied to the evolution of its products and services, Coffey says. The company started with a standalone marketing product and later expanded to offer a suite of apps for both marketing and sales, he says. With that, it has received a lot of interest from other software companies that want to integrate their products with HubSpot’s.

“Fundamentally, we’re hoping to deliver value to our customers,” Coffey says. “We think a way to do that is to have a rich ecosystem of partners building on our platforms. The more we can do to help those partners grow, and create more value, that’s a win for” everyone.

One of the marketing technology trends HubSpot is following is the increased popularity of Facebook videos, Coffey says. “These are typically short, often silent, and maybe with subtitles,” he says. “It’s a big shift in the type of content you need to produce.”

Still, older online marketing tools, like e-mail, “aren’t going away,” Coffey says. That’s why a company like Sigstr is “compelling,” he adds. Sigstr’s software turns corporate e-mail signatures into a marketing channel, where staff can reinforce branding strategies and tailor sales pitches.

“More and more, e-mails are getting personalized,” Coffey says. “Allowing marketers to be able to customize some of the messaging within that is pretty compelling.”

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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