Personal blog of Yzmir Ramirez

Sendlane, a San Diego-based multichannel marketing automation platform, announced Thursday it raised $20 million in Series A funding.

Five Elms Capital and others invested in the round to give Sendlane total funding of $23 million since the company was founded in 2018.

Though the company officially started three years ago, co-founder and CEO Jimmy Kim told TechCrunch he began working on the idea back in 2013 with two other co-founders.

They were all email marketers in different lines of business, but had some common ground in that they were all using email tools they didn’t like. The ones they did like came with too big of a price tag for a small business, Kim said. They set out to build their own email marketing automation platform for customers that wanted to do more than email campaigns and newsletters.

When two other companies Kim was involved in exited in 2017, he decided to put both feet into Sendlane to build it into a system that maximized revenue based on insights and integrations.

In late 2018, the company attracted seed funding from Zing Capital and decided in 2019 to pivot into e-commerce. “Based on our personal backgrounds and looking at the customers we worked with, we realized that is what we did best,” Kim said.

Today, more than 1,700 e-commerce companies use Sendlane’s platform to convert more than 100 points of their customers’ data — abandoned carts, which products sell the best and which marketing channel is working — into engaging communications aimed at driving customer loyalty. The company said it can increase revenue for customers between 20% and 40% on average.

The company itself is growing 100% year over year and seeing over $7 million in annual recurring revenue. It currently has 54 employees right now, and Kim expects to be at around 90 by the end of the year and 150 by the end of 2022. Sendlane currently has more than 20 open roles, he said.

That current and potential growth was a driver for Kim to go after the Series A funding. He said Sendlane became profitable last year, which is why it has not raised a lot of money so far. However, as the rapid adoption of e-commerce continues, Kim wants to be ready for the next wave of competition coming in, which he expects in the next year.

He considers companies like ActiveCampaign and Klaviyo to be in line with Sendlane, but says his company’s differentiator is customer service, boasting short wait times and chats that answer questions in less than 15 seconds.

He is also ready to go after the next vision, which is to unify data and insights to create meaningful interactions between customers and retailers.

“We want to start carving out a new space,” Kim added. “We have a ton of new products coming out in the next 12 to 18 months and want to be the single source for customer journey data insights that provides flexibility for your business to grow.”

Two upcoming tools include Audiences, which will unify customer data and provide insights, and an SMS product for two-way communications and enabled campaign-level sending.

As businesses continue to adopt new digital tools to get their names out into the world, a startup that’s built a sales and marketing platform specifically for small and medium businesses is announcing a big round of funding. ActiveCampaign, which has built what it describes as a “customer experience automation” platform — providing a way not just to run digital campaigns but to follow up aspects of them automatically to make sales and marketing work more efficiently — has closed a $240 million round of funding. The Series C values the Chicago startup at over $3 billion.

The round is being led by a new, big-name investor, Tiger Global, with participation from another new backer Dragoneer, along with Susquehanna Growth Equity and Silversmith Capital Partners, which had both invested previously.

This funding round represents a huge leap for ActiveCampaign. It was only in January 2020 that it raised $100 million, and before that, the company, which was founded in 2003, had only raised $20 million.

But as we have seen in many other ways, the pandemic resulted in a surge of interest among businesses to do more — a lot more — online than ever before, not least because so many people were spending more time at home, carrying out their consumer lives over the internet. That led to ActiveCampaign growing to a customer base of 145,000 customers, up from 90,000 16 months ago.

That points not just to the company already growing at a decent clip before the pandemic, but how it capitalized on that at a time when companies were looking for more tools to run their businesses in the new world.

The growth was not about ActiveCampaign throwing more money into business development, founder and CEO Jason VandeBoom said in an interview. “It was the network effect of people finding success. Even today, organic word of mouth is our primary driver.”

The company’s tools fit into a wider overall trend in the world of business: automation, built on the back of new, cloud-based technology, is being adopted to carry out some of the less interesting and repetitive aspects of running a business.

In the case of sales, an example of what ActiveCampaign might provide is a way for an e-commerce business to identify when a logged-in customer (that is, a user who has an account already and is signed in) might have ‘abandoned’ a visit to a site before buying a product that had already been searched for, or clicked on, or even added to a cart. In these cases, it sends an email to customers reminding them of those items, with options for other follow-ups, in the event that the choice was due to being distracted or having second thoughts that might be persuaded otherwise.

Users can opt-out of these, but they can be useful given the genuine distraction exercise that is browsing online — with all of the unrelated notifications, plus other options for considering a purchase. Tellingly, ActiveCampaign integrates with 850 different apps, a measure of just how fragmented the online landscape is, and also how many ways your attention might be distracted, or snagged depending on your perspective.

Abandoned carts can cost a company, in aggregate, a lot of lost revenue, yet chasing those down is not the kind of task that a company would typically assign to a valuable employee to carry out. And that’s where companies like ActiveCampaign come in.

This, plus some 500 other actions like it around sales and marketing campaigns — VandeBoom calls them “recipes” — some of which have been contributed by ActiveCampaign’s own users, form the basis of the company’s platform.

The marketing and sales automation market is estimated to be worth billions of dollars today, and, thanks to the rise of social media and simply more places to spend time online (and more time spent online) is expected to be worth more than $8 billion by 2027, so it’s going after a lucrative and much-used tool for doing business online. (And others are looking at it as well, of couse, including newer entrants like Shopify coming from a different angle to the same problem. Shopify today is a valued partner of the company, VandeBoom said when I asked him about it.)

That gives ActiveCampaign not just a big opportunity to continue targeting, but possibly also makes it a target itself, for an acquisition.

The other key aspect of ActiveCampaign’s growth that is worth watching is related to its customers. While the company has a client base that includes recognized names like the Museum of Science and Industry based out of ActiveCampaign’s hometown, it also has some 145,000 others across nearly 200 countries with a big emphasis on small and medium businesses.

SMBs form the vast majority of all businesses globally, collectively representing a huge win for tech companies that can capture them as customers. But traditionally, they have proven to be a challenging sector, given that they cover so many different verticals, are in many ways more price-sensitive than their enterprise-sized counterparts, among other factors.

So for ActiveCampaign to have found successful traction with SMBs — including with pricing that works for many of them (using it starts at $9 for accounts with less than 500 contacts) — is likely another reason why the startup has caught the eye of investors keen to back winning horses.

While the company did not need to raise money, VandeBoom said he “saw it as an opportunity to bring in more partners, saying that investors like how it purposely went after the idea of customer experience not on vertical or locale.”

“We’ve been lucky enough to have a front row seat on this journey from early on – and it’s been pretty breathtaking,” said Todd MacLean, managing partner, Silversmith Capital Partners, in a statement to TechCrunch. “Even compared to other great growth companies, the momentum and capital efficiency are rare.  But Jason is a rare entrepreneur and has built a team in his image.  While there’s lots left to do, we believe we’ve only scratched the surface of this market opportunity and are excited to double-down on Jason and his vision.”

Marketing and sales automation — tools that leverage the advances and data of our digital age to better identify and then interact with customers — is big business, with the whole market expected to generate some $6.6 billion in revenues for related companies by 2025.

But “companies” is the operative word here: it’s a very fragmented space, with dozens of hopefuls covering different aspects of marketing and sales, each with its own unique approach. There is an alternative trend, though, and today a customer experience automation company called ActiveCampaign, catering not just to large enterprises but small and medium businesses too, has raised a large round of funding to build out its own one-stop-shop model. It includes the tools to run email and messaging-based marketing campaigns; marketing automation across sites and events; and sales and CRM.

The Chicago-based company is today announcing that it has closed a Series B of $100 million, money that it will use to invest in building out new technology and to expand internationally. The funding is being led by Susquehanna Growth Equity, with PE firm Silversmith Capital Partners also participating.

ActiveCampaign is not your typical startup. It has been around since 2003, and this is only the second time it has raised money — the first time was in 2016, a modest $20 million round from Silversmith. Fundraising is not the only thing that sets it apart: it’s also profitable and has been for years (one reason it hasn’t raised money), and it’s actually already quite large, with 90,000 customers in 161 countries.

Yet it’s something of a theme in the world of “startups” — meaning tech companies that are still privately owned and raising from VCs and related backers — particularly those that are B2B focused, that some of the more interesting and successfully bootstrapped of them at some point turn to VC and private equity when it comes to needing an extra boost to move beyond what has become its natural growth rate.

In the case of ActiveCampaign, it had a taste of what a little outside investment could do in the last few years: Jason VandeBoom, founder and CEO of ActiveCampaign, said the company has seen its annual recurring revenues grow 6x since 2016 to $90 million, with employees booming from 65 to more than 550.

The company’s core proposition is that it provides a less fragmented approach to businesses interested in building in some digital marketing or sales tools into their outreach and then considering what to do next.

“What we are up against are a number of companies focused on a single slice of customer experience, either CRM or a customer success platform,” VandeBoom said. “We’re still at this point in the industry where the category is taking shape,” which spells a ripe opportunity for ActiveCampaign.

The need for what ActiveCampaign provides is a basic one: Whether you are an online retailer or any business that wants to expand its audience or make sure to stay connected to the one you already have, you need tools to reach users, figure out what they want to see from you and connect in a relevant way.

VandeBoom added while there are no specific plans for acquisitions that can be discussed now, the funding also gives the company “optionality” in terms of what it might do next.

Part of the company’s approach is to build technology in-house, but in the spirit of all-in-one platforms, its value also lies in how many other things its users can plug into using ActiveCampaign.

The company has some 260 technology partners and a “recipe library” with more than 250 automations already built, or users can build and customise themselves from more than 300 possible apps that can be integrated, including Shopify, Square, Facebook, Eventbrite and Salesforce.

With this round, Martin Angert, director at Susquehanna, is joining ActiveCampaign’s board of directors. His existing roles on the boards of Workfront, WhiteSource, XebiaLabs and Allocadia speaks to interesting potential strategic partnerships for ActiveCampaign.

“ActiveCampaign and the CXA category have grown significantly and our investment in the series B reconfirms Silversmith’s commitment to ActiveCampaign’s future,” said Todd Maclean, co-founder and managing partner of Silversmith Capital Partners, in a statement.