ActiveCampaign CEO Jason VandeBoom acknowledges that many companies favor the SoftBank approach—to … [+]
Most fast-growing tech startups aspire to a Series B funding round—but few wait nearly two decades before raising the money. An exception is Chicago-based ActiveCampaign, which offers subscription software that makes sales and marketing more efficient through automation.
The company announced Tuesday that it had raised $100 million in a round led by Susquehanna Growth Equity and joined by previous investor Silversmith Capital Partners. CEO Jason VandeBoom twice declined to provide a valuation for his company. “We’re trying to stay away from a lot of the classical things that I think take you down the path of what we’re seeing in the market today, where people essentially manufacture valuation and obsess about it.”
VandeBoom founded ActiveCampaign in 2003 as a one-man operation to help small businesses manage their customers. “I would get an order notification or a support email,” he recalls. “I was in college at the time and I would drop everything I was doing. It was for like $30, and I would spend 10 hours with that customer.”
Over 13 years of bootstrapping, he grew the company into a software provider to help businesses create email marketing campaigns and automate interactions with customers. The software can take on a consulting role, giving users advice on how best to reach customers. For example, ActiveCampaign can allow users to selectively email customers depending on whether they purchased a product.
Today, ActiveCampaign’s 90,000 customers range from healthcare providers to symphony orchestras, VandeBoom says. Its annual recurring revenue has increased sixfold since 2016 to $90 million, and the business is profitable.
In 2016, ActiveCampaign raised $20 million in its first round from Silversmith Capital Partners. Employee count subsequently shot up from 65 to 550. The company now has customers in 161 countries, with more than half international. That’s spurred the company to expand its workforce to Brazil, Ireland and Australia on top of a second U.S. office in Indianapolis. With the new raise, VandeBoom plans to continue international expansion and increase the software’s functionality.
“I never thought of funding as a need or requirement or even a positive thing early on as a business,” VandeBoom said. “A lot of people think you either have to bootstrap only, or you have to just go the VC route. I think a blended approach can work as well, where you keep those principles of bootstrapping intact. And that’s why we’re such a sustainable business.”
ActiveCampaign is one of thousands of vendors providing marketing technology. By offering its services at a lower price, says Joe Stanhope, a principal analyst at Forrester, the company has made itself attractive to smaller businesses that have historically been priced out by Adobe or Salesforce. “ActiveCampaign sits in the middle of the taxonomy,” Stanhope says.
VandeBoom wants to appeal to all levels of vendors, from solo entrepreneurs to small companies to enterprises. That may be hard: it will have to outshine rivals like HubSpot by increasing its features and scaling its customer support in order to compete for corporate clients, Stanhope says. ActiveCampaign may find it more feasible, he added, to keep focusing on small and mid-sized businesses, where the addressable market exists for hundreds of thousands of customers.
Selling to them will have to pave the way to growth. VandeBoom says he isn’t planning to seek investments anytime soon.
“Are we going to raise again in three six months?” he hypothesized. “We don’t need to.”