- BRW Lists
Published 02 August 2013 12:10, Updated 26 November 2013 18:35
An eye-popping $US165 million investment in that Twitter-loving owl at Hootsuite. Photo: Michele Aboud
HootSuite has secured $US165 million ($184.5 million) in venture capital funding, in a sign of growing confidence in the market for businesses to pay for software to manage their social media.
The Series B financing for the Vancouver-based firm is a co-investment led by Insight Venture Partners, which has previously backed companies such as Flipboard and IndieGoGo.
HootSuite’s existing investor OMERS Ventures and Accel Partners also participated in what is one of Canada’s largest ever venture capital rounds. Accel has previously backed Facebook as well as Australian start-ups Atlassian and 99Designs.
Founded four years ago, HootSuite provides a dashboard for people or companies to manage multiple social media accounts and claims seven million users around the world.
It operates on a “freemium” model, where the basic service is free but customers upgrade to a Pro or Enterprise level service with more functionality. In a classic software-as-a-service model, users pay on a monthly basis with no contract.
Enterprise customers include PepsiCo, Virgin, Orange, Sony Music, HBO, Panasonic and 237 of the Fortune 500.
At the enterprise end, HootSuite competes with large software companies such as Adobe with Adobe Social and Salesforce with Radian6. However, its pricing structure means that it has a much lower barrier to entry, which is appealing both to SMEs and to enterprises where line-of-business managers can make low-cost software decisions.
HootSuite, which has already increased staff numbers from 180 to 300 over the past year, intends to use the funding to continue expanding its global reach, invest in product development and sales and marketing and evaluate acquisitions.
The venture capital firms say the funding reflects their belief in the importance of social media management software for business users.
Accel Partners managing director Ryan Sweeney says the firm has long believed in the relevance of social media to consumers and this is now playing out in the business space.
“What’s become apparent is that social channels are also becoming the manner in which small businesses through the Fortune 500 are opting to communicate with their customers and target markets,” Sweeney says. “By every metric, HootSuite’s social relationship platform is powering this evolution in corporate communications, and we are thrilled to now be its partner as it continues to scale.”
OMERS Ventures chief executive John Ruffolo says the firm made its original 2012 investment because it believed in the integration of social media within the enterprise.
“Since then, HootSuite has shown the market that this trend is not only important, but critical for any company looking to be relevant,” Ruffolo says. “We are committed to helping the team become the dominant player in this market.”
With this investment, Sweeney, Ruffolo and Insight Venture Partners managing director Jeff Leiberman join HootSuite’s board of directors.