Over the last several years, social media has become a critical and central way for businesses to communicate, and market to, their customers. Now, one of the startups that help spearhead this trend has raised a round of growth funding to expand its horizons. Hootsuite, the Vacouver-based social media management company that counts some 16 million businesses as customers, said today that it has raised $50 million in growth capital — specifically through a credit financing agreement — from CIBC Innovation Banking.
We asked Ryan Holmes, the co-founder and CEO, for details about its valuation and funding, and said that it will be used for more acquisitions in the near future, and with it the valuation is unchanged.
“We opted for to go with non-dilutive credit at this point and found a great partner and terms in CIBC,” he wrote in an email. “The company is cash flow positive and the facility will primarily be reserved for M&A purposes. There is no associated valuation, however our latest 409a is up from last year and growth is very strong.”
“This financing is a testament to the strong fundamentals behind Hootsuite and our ongoing commitment to innovation and growth as the clear leader in social media management,” said Greg Twinney, CFO of Hootsuite, in a statement. “The additional capital will help us scale even faster to bring the most innovative products and partnerships to market globally and help our customers strategically build their brands, businesses and customer relationships with social.”
The funding, according to the release, will also be used to expand its business in Asia Pacific, Europe and Latin America. It also plans to add in more tools to serve the needs of specific verticals like financial services, government and healthcare.
You may not know the name Hootsuite but you might recognise its mascot — an owl — and more specifically its corresponding shortened link — it starts with ‘ow.ly’ — that is used a lot on Twitter, the social network that gave Hootsuite its first customers and ubiquity.
Things have moved along quite a bit since those early days, when Hootsuite first started as a side project for Holmes, who himself was running a marketing and advertising agency when he started it. Social media is the fastest-growing category for marketing spend — partly because of the popularity of social networking services like Facebook, Snapchat and Twitter; and partly because “eyeballs” can be better tracked and quantified on these networks over more legacy channels like print and outdoor ads.
In keeping with that growth, Hootsuite itself now integrates with just about all of the major social platforms, most recently finally adding Instagram earlier this month. Its customers use a dashboard to both monitor a variety of social media platforms to track how their companies are being discussed, and also to send out messages to the world. And to meet they now use that dashboard and Hootsuite for a growing array of other services, from placing ads to content marketing to analytics across an increasing number of platforms — a range of services that Hootsuite has developed both in-house and by way of acquisition.
One challenge that Hootsuite has had over the years has been the company’s focus on the freemium model, and how to convert its initially free users into paying tiers with more premium offerings. Some of that expansion into new services appears to have helped tip the balance.
“In the past year, Hootsuite has seen tremendous growth from acquisitions like AdEspresso, to strategic partnerships with market leaders such as Adobe, to recognitions such as being named a leader in the Forrester Wave and G2 Crowd,” said Holmes in a statement. “This financing allows Hootsuite in continuing to create strong value for customers looking to unlock the power of social.”
Another has been the fundamental fact that it relies on third parties to essentially “complete” its offering: Hootsuite offers analytics and tools for marketing, but still needs to connect into social networks and their data pools in order to do that. This makes the company somewhat dependent on the whims of those third parties. So, for example, if Twitter decides to either increase the fees it charges to Hootsuite, or tries to offer its own analytics and thereby cuts off some of Hootsuite’s access, this impacts the company.
One solution to this is to continue to integrate as many other platforms as possible, to create a position where its stronger because of the sum of its parts. Unsurprisingly, Hootsuite also says that some of the funding will be used to increase its partnerships and integrations.
from TechCrunch http://ift.tt/2pcLZlc
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