Leadspace: Series C, AI, and ABM

LeadSpace Use Cases
LeadSpace Use Cases

Predictive Analytics and Audience Management vendor Leadspace completed its Series C.  The funding round was led by Arrowroot Capital and joined by JVP.  The $21 million round will be used “to grow our customer team in San Francisco and Denver, and our AI and data management product teams in Israel.”

The firm is assessing additional locations, including possible offices on the East Coast and Europe, “perhaps” London.

Arrowroot has taken a seat on Leadspace’s Board.  The firm wanted growth equity advisors instead of traditional VCs for Round C.  “At this point the investment is not just in the idea and the team, but also the underlying metrics and performance of the business,” said CEO Doug Bewsher.  “Once you have “Product/Market fit”, the kinds of questions investors ask are whether you are ready to scale; what are the opportunities for further growth; and apart from additional investment can we be an investment partner that can help you address these opportunities?”

Bewsher noted that marketing has been transformed over the past seven years since Leadspace was founded.  Firms are switching from tactical demand generation programs to targeted Account Based Marketing (ABM) communications.  “No longer is it OK to just send out blanket “nurture” emails to everyone and hope that will generate positive customer engagements. No longer can you rely on a single data source as the basis to know your customer. No longer is it enough for marketers to just think of leads — they need to market to accounts, and teams of people. Neither can marketers afford to ignore intelligence and information from external parties, and simply rely on the limited info they gather internally.”

Not only has the nature of B2B marketing been transformed, but “world class B2B sales and marketing organizations” need to become more like consumer companies with a deep understanding of the account at multiple levels.  Echoing Sirius Decisions, Bewsher said that B2B marketers need to “really know your customer at the account, demand unit and individual level, and then target and personalize your messaging to cut through the noise. And think customer-first.”

As an analytics company, Bewsher talks up the value of AI for sales and marketing as it begins to address specific problems and workflows:

AI is everywhere. While there is no doubt that it is going to change every corner of our life, both as private users and business people, I think we will start to move from the promise to the reality in 2018. In business-to-business sales and marketing in 2017, it was enough to say: “We have a ton of great data scientists who are working on new ways to better engage your customers.”

But in 2018 customers will look to see actual results — like the 90 percent increase in email connection rates we have seen from the deployment of AI to recommend the right way to engage a specific user. This will require a maniacal focus on specific use cases from the emerging area of AI.

One area where AI will improve revenue generation effectiveness is in ABM programs which has been limited by the human ability to consume information and the historical lack of data availability.  However, “AI is changing all this, with the ability to consume and understand unprecedented amounts of information and turn this into action at scale and in real time. So sales and marketing teams now have the opportunity to drive much more relevant and effective engagement programs for their entire potential target audience.”

According to Leadspace, they are trusted by over 130 B2B brands and seven of the top ten enterprise software companies.  Clients include Microsoft, Marketo, Oracle, and RingCentral.

 

Artesian: £3.5M in Expansion Capital to Focus on A.I.

Arti responds to "How many companies do you cover?"
Arti responds to “How many companies do you cover?”

British sales intelligence vendor Artesian Solutions announced that it received £3.5M in expansion capital from Columbia Lake partners. The funds will be used to refinance current debt obligations and provide working capital for “further growth and expansion.” The refinancing also provides better terms and business flexibility after the firm reached a profitability milestone in July.

Artesian has begun integrating artificial intelligence into its tools. Earlier this year, it launched Insight Agent, “the first step in a series of intelligent chat bots aimed at automating many of the tasks carried out by B2B professionals” along with Arti, the firm’s interactive digital assistant.

“This is an exciting milestone in our company’s history and positively reinforces the leadership position we have attained.  We are constantly looking at the ‘what next’ scenario, pushing boundaries to establish our business as one of the leading innovators in B2B software for commercial teams, this has paved the way for our new risk mitigation capabilities which will be released in the New Year.”

  • Artesian Solutions CEO Andrew Yates

The firm has recently shifted its positioning from social selling to “A.I. powered sales intelligence.”

“Social Selling sits at the heart of Artesian’s founding principles,” explained Yates. “But as sales best practice has evolved, so has Artesian. Our goal is to be at the forefront of technology evolution for enterprise B2B, delivering a suite of A.I.-powered tools to make prospecting, engaging and closing deals easier. As our forthcoming risk mitigation capabilities demonstrate, we will continue to evolve to ensure we remain a trusted partner of our enterprise customers and to maximise the impact of their business relationships”

Artesian offers products for both the British and American markets.

 

SaaS Market Valuations

Venture Capital and Private Equity firms place a higher valuation on companies with recurring revenues. In Q1, software companies with a SaaS model received multiples of seven times revenue while other software companies received a multiple of 6.1.

“Any firm with recurring revenue is extremely attractive to investors,” said Rohit Kulkarni, head of research at SharesPost. “The subscription model translates to greater visibility of revenues, less volatility.”

According to PitchBook Data, Software-as-a-Service deals grew 217% between 2010 and 2016.

“SaaS is a more predictable and reliable revenue stream than if you had to go out and sell the software — the perpetual license model,” said Peter Fair, managing director at Golub Capital LLC.

Michael Larsen of Cambridge Associates said that SaaS models provide a “better measuring stick” as “these companies are moving toward more attractive, more readily transparent ways of selling products and they have attractive, meaningfully recurring revenues.” Employing a SaaS model does not prevent firms from failing but “it creates a more intensely analytical and measurable way of determining how a company is doing.”

For example, subscription firms that employ discounted offers to lure new customers may suffer from churn and see their business model unravel quickly. Subscription length needs to be carefully factored into valuing a firm and estimating its viability.

Synthio Series B

Synthio Use Cases
Synthio Use Cases

Synthio, formerly known as Social123, closed on a $10.5 million equity round to expand its Customer Data Platform.  The Series B round was led by Fulcrum Equity partners, bringing its total funding to $18.5 million.  Other participants included current investors Vocap Investment Partners, Spinnaker VC Direct, LLC,  Bahns Stanley, Stanley Partners, Ellis Capital, Buckhead Investments, the AIM Group, and Silicon Valley Bank.  The round valued the firm at $33.5 million.

Synthio will be dedicating the funds towards platform and product enhancements along with “significantly” expanding their sales, marketing, and customer success teams.

Synthio is perfectly positioned to become the must-have solution for business-to-business enterprise marketers tasked with managing complex and rapidly changing customer data.  The new funding allows us to continue investing in our unique ability to synthesize 1st and 3rd party data into the highest quality contact, firmographic, and technographic profiles.  Our contact-centric approach to customer data is unique in the market and is an indispensable solution designed to address the major pain points hampering marketers’ productivity and performance.

  •  Synthio CEO Aaron Biddar

Synthio emphasized the need for high quality data to fuel Marketing Automation Platforms and ABM campaigns.

“High quality leads and prospects are the mined gold on which companies spend fortunes and today’s marketers and sales professionals require that this data be in pristine condition,” said Jim Douglas, Partner at Fulcrum.

Synthio has over 200 active subscription customers and made the last two Inc. 5000 lists.  According to Inc., the firm posted $2.8 million in revenue in 2015 with a 123% three-year Compound Average Growth Rate.  The firm claims to have doubled their revenue in both 2015 and 2016.

Outreach: $30 Million for Empowering Sales Reps

Outreach Workflow Intelligence combines Outreach prospect and process analytics with third-party company and contact information.
Outreach workflow intelligence combines Outreach prospect and process analytics with third-party company and contact information.

Account Based Sales Development (ABSD) vendor Outreach announced a $30 million Series C round led by DJF.  With the capital injection, Outreach raised its total funding to $60 million.  The valuation was not disclosed.  Other round participants included Four Rivers Group and existing investors Mayfield, MHS Capital, Microsoft Ventures and Trinity Ventures.  Funds will be deployed towards additional product development, staffing, and marketing.

“The future of selling will be machines helping sales reps by removing the barriers of what bogs them down and empowering them to do their best work,” blogged Outreach CEO Manny Medina.  “This round gives us the ability to make the required investments in machine learning and natural language processing. We’re doubling down in an area many in the market are talking about, but have yet to make a reality. With this investment, Outreach will continue to innovate to improve the day-to-day life of sales reps and their impact on the companies and communities they serve.”

Outreach helps automate, track, and analyze sales rep tasks across multiple communication channels including email, phone, and LinkedIn.  Activities are tracked and synchronized with Salesforce, Gmail, and Exchange.  Outreach supports over 1,200 sales teams including sales organizations at Adobe, Pandora, eBay, Marketo, and Zillow.  The firm supports the efforts of over 15,000 sales reps.

Like many industries, technology is transforming sales from an art to a science.  Sales is no longer about following up on inbound leads and hunting for a few big deals. It is about sales excellence – predictably executing the right selling activities at the right time.

  • Outreach CEO Manny Medina

The firm, founded in 2014, doubled its employment over the past year to 170.  Outreach is looking to grow its product and engineering group from thirty to fifty staff before the end of 2017.  Outreach is based in Seattle with offices in San Francisco and State College, PA.  They recently opened an office in Tampa, Florida which has hired some of the talent from recently shuttered competitor KiteDesk.

While I have not heard the specific rationale behind the KiteDesk shutdown, a former CxO at the firm suggested that they lacked the capital to compete against well-funded competitors such as Outreach and SalesLoft.

Along with the funding round, Outreach announced that DFJ Growth Partner Sam Fort has been added to Outreach’s Board. “The opportunity for a platform that simplifies and automates the sales process is massive and we are thrilled to have Outreach join our portfolio,” said Fort.

MarTech Landscape

Snippet from the 2017 Marketing Technology Landscape (Source: Scott Brinker, Chiefmartec.com)
Snippet from the 2017 Marketing Technology Landscape (Source: Scott Brinker, Chiefmartec.com)

Scott Brinker published the 2017 Marketing Technology Landscape, his annual exercise in shrinking thousands of logos into a super graphic.  This year, the list grew 40%, to a total of 5,381 solutions (from 4,891 unique companies).  Over the past year, 4.7% of the vendors were removed and 3.5% “changed in some fundamental way — their name, their focus, or their ownership.”

By size:

  • 6.9% have at least 1,000 employees or are public.  Brinker describes these 300+ firms as enterprises.
  • 44.2% are private businesses with either fewer than 1,000 employees or no funding data
  • 48.8% are investor-funded startups at any pre-exit stage

“So for those who assumed most of these companies are tiny, it’s worth noting that over 300 are enterprises of significant scale,” said Brinker.  “It’s also true that over 2,300 others have received some sort of investor funding — which implies scale beyond a couple of rogue developers in a garage (or, for a more modern-day cliché, two people in a coffee shop).”

The bottom group of “investor funded startups at any pre-exit stage,” which makes up nearly half the firms, is a growing phenomenon in the SaaS universe. Analyst Clement Vouillon of Point Nine Capital said that ten years ago, there were few SaaS companies that weren’t looking for VC-funding.  Growth in self-funded SaaS ventures has been fed by a growth in underlying platforms and advice.  Thus, “building and distributing a SaaS product is easier, faster and less expensive.”

Vouillon noted a number of additional reasons for self-funded bootstrappers:

  • Experienced founders have previously worked at VC-backed firms and are looking to avoid the model.
  • Competition prevents firms from scaling but permit the firm to operate as “a lean and profitable SaaS business.”
  • The SaaS firm is a feature that can operate on SaaS platforms (vs. being a full product).
  • The firm’s total addressable market (TAM) is not large enough to attract VC funds, but is sufficient to permit profitability.
  • The firm is local but not easily scalable.

“The majority of these companies have their sweet spot in the tens to hundreds [of] thousands dollars of MRR,” said Vouillon.  “Once reached they’ll continue to grow but more slowly and they won’t scale to millions dollars of MRR.”

The spectacular scope explosion of marketing — and the rate at which new disruptions and innovations continue to roil marketing and business at large — has made it impossible for any one vendor to deliver everything that every marketer needs in a digital world.  Almost all of the major providers now acknowledge this, and they’ve shifted their strategies to embrace the ecosystem — becoming true “platforms” that make it easier for marketers to plug in a variety of more specialized and vertical solutions.

  • Scott Brinker, Editor of ChiefMartec.com

Many of the firms covered in this blog are located in the Audience/Market Data and Data Enhancement section.  This group includes predictive analytics companies, tech data vendors, DaaS hygiene, and alerting companies.

Other groupings with covered firms in this newsletter include ABM; Predictive Analytics; and Sales Automation, Enablement & Intelligence.

Crunchbase Series B

Last week was a busy week for VC funding in the SalesTech space.  Yesterday, I covered SparkLane’s funding round and today I am blogging about PE/VC database Crunchbase which announced an $18 million Series B led by Mayfield.  The funding announcement was paired with the launch of a new team-based Crunchbase Enterprise service.  Crunchbase was spun out of AOL in 2015 with $6.5 million in funding from Emergence Capital followed by a smaller $2 million round.  Crunchbase also laid out plans for a Crunchbase Marketplace that would allow the company to become the “Facebook of company information.”

The new funds will be dedicated towards extending its SaaS offerings, expanding its database, and growing its teams with a “significant commitment to diversity.”

“Mayfield is excited to partner with Jager McConnell and the team at Crunchbase to be the place where consumers, professionals, and businesses can easily access the information on companies to sell to, market to, partner with, finance, work for, research, acquire, and do business with. The early success of Crunchbase Pro and its usability have given us a view into the ambitious vision and roadmap of increasing the breadth, depth, and accessibility of the high-quality data platform Crunchbase is creating,” commented Rajeev Batra, Partner at Mayfield. “Crunchbase not only has a globally dominant position and brand, it has the potential to be a true platform company in becoming the actionable master record for company data.”

Crunchbase funding rounds and investors
Crunchbase funding rounds and investors

Crunchbase now offers an API along with three levels of service: free, Pro ($29 / month), and Enterprise ($99 / user / month with a minimum of five users).  Additional services are in the pipeline.

The free service receives 2.3 million unique visitors per month of which 40%  of site traffic is international.  Pro, which was launched last September, is “well past” 5,000 subscribers according to CEO Jager McConnell.  The firm has licensed its API to more than ten partners including Glassdoor and SimilarWeb.

The new Enterprise service combines Pro with API access, list downloads, email addresses, phone support, and a CRM connector.  The AppExchange service supports daily Crunchbase updates and data change alerts.

Crunchbase product pricing and features table
Crunchbase product pricing and features table

Crunchbase now covers a half million companies and 2,700 VC firms.  Other content includes investors, people, events, and products.  Data is maintained by a team of editors with updates provided to Crunchbase by their member community.  The database also benefits from VC firm updates and machine learning tools which search for anomalous information.  Annually, five million updates are made to the database.

Crunchbase has become the go-to destination for accurate and up-to-date company information for businesses all over the world,” said McConnell. “As we grow, hiring a diverse team will bring a variety of valuable perspectives into the business, which reflects the culture of Crunchbase. This will remain a focus of hiring as the company doubles in size in the next year.”

Crunchbase clients include Affinity, Datafox, Datanyze, Deloitte, Engagio, Everstring, Infer, Microsoft, Nestle, Samsung, Slack, Target, Volkswagen, and IBM Watson.  The firm has forty staff of which 43% are women and half are non-white.

McConnell wants Crunchbase to be the Facebook of company information.  “The premise is: it would be impossible for a single company to find all these slivers of company information, and put it into one spot on their own. They can’t be all those core competencies, so the idea is, let’s go and form these partnerships with all these companies that have those core competencies, put it in one place and, if we do a good job here, the user will say, ‘I know where to go, it’s where all this data comes together, that’s at Crunchbase.’”

To accomplish this vision, Crunchbase is readying a Crunchbase Marketplace of fifteen to twenty partners “to build a true company master record.”  Thus, Glassdoor would provide CEO ratings, employee ratings, and available jobs while SimilarWeb would feature website traffic for a specific company or industry.

Users will have the ability to select which content sets display.  The goal is to cover all of the companies on the Internet.

“Over time, pretty much every data provider that has some slice of company information, we’d like our users to have the ability to go and add that data directly into their experience. Sometimes that will be free, like Glassdoor will be a free dataset, but other times it may even cost a little bit of money to go add in technology stack data, or patent data,” said McConnell.  “Sometimes people want to know not just about funding, but about jobs, the CEO or all the companies in their geography that have a certain amount of website traffic.  Or sales reps want to find people who use a competitive product. Right now, they need three partners to get all that data. We want to let you choose it as part of the experience.”

David Sternis of Deloitte said, “The quality and accessibility of Crunchbase data is second to none. We save an immense amount of time by using Crunchbase Enterprise to power our TechHabor solution in order to stay on top of the innovation and startup landscapes. Our teams spend a fraction of the time they used to on research and market analysis and can prioritize focusing on providing strategic recommendations for our clients.”

Note: While Crunchbase and CB Insights both cover the PE/VC space, they are separate, non-affiliated companies.