It’s pretty rare to see an investor back a company that’s trying to disrupt another company in its portfolio. But that’s exactly what Scale Venture Partners is doing. Four years ago, the firm invested in ExactTarget, an email marketing software company. ExactTarget has since gone public on the NYSE.
Now, the firm is pouring $20 million into Sailthru, a company which aims to disrupt ExactTarget and all of its competitors. Rob Theis will join the company’s board. Sailthru previously raised $28 million from Benchmark, RRE Ventures, DFJ Gotham Ventures, AOL Ventures, RAP Investments, Lerer Ventures (a PandoDaily investor), Thrive Capital, Bowery Capital, Pilot Group, and Metamorphic Ventures.
So far, it appears to be working: Sailthru has accumulated more than 400 clients, serviced by 145 employees. The company earned $8.1 million in 2012 and has more than doubled that this year. When asked about profitability, CEO Neil Capel says Sailthru is in “growth mode,” which means it hasn’t quite turned a profit. It has a fresh $20 million to burn through before worrying about that.
Known initially as a content recommendation service, and then an email marketing service, Sailthru is strong in personalization. The company has expanded its tools to include everything from email marketing to customer development, CRM, revenue management, marketing data and analytics, and creative services. For those of you who like buzzwords, Sailthru now offers an “omnichannel solution.”
Capel says his company has grown to this point organically, with mostly inbound leads and little marketing. The new capital will go toward more formal marketing of Sailthru and toward increasing Sailthru’s headcount. “Now that the market is ready, it’s a critical mass of movement of CMOs responding to what’s possible today,” he says. “They’re coming to us, so we’re really going for it and taking as much of the market as we can.”
Sailthru is displacing budgets of other email providers, including ExactTarget and Responsys, Capel says. Unlike its competitors, Sailthru’s personalization can be extended across many marketing channels beyond just email. “We’re personalizing every touchpoint and that’s what companies need today,” Capel says.
Sailthru’s best example of how its tech works is that is helps companies send fewer marketing emails, because the personalized ones are more effective. During Cyber Monday this year, Sailthru clients sent 33 percent fewer emails than last year, but open rates were 16.4 percent higher and revenue per email sent increased 24.3 percent.