Of the 50 or so companies which graduated from TechStars New York over the past four years, Contently might be the biggest breakout hit. The company started out as a marketplace for freelance writers, but has morphed into a full-on SaaS software provider, helping Fortune 2000 brands from Pepsi to Amex commission content from freelancers and manage the process. They’re riding that whole “brands as publishers” trend.
Today the company announced a new round of funding worth $9 million from Sigma West, Sigma Prime, and existing investors. Josh Breinlinger, Partner at Sigma West, and Paul Flanagan, Managing Director at Sigma Prime, will join the company’s board. The Series B follows Contently’s $2 million Series A round from 2012.
Contently had held multiple acquisition talks leading up to the fundraising, but co-founder Shane Snow says the company decided to “pursue our own destiny instead.” This new funding will help propel Contently to its ultimate goal of an IPO, he says.
That is a long way off, judging by the average amount of time and funding raised before enterprise companies go public, but Contently is currently growing revenue at 400 percent year-over-year. “If we grow around 400 percent each year we could go public in three years,” Snow predicts. The latest bit of funding will help him “turn a 30-person company into a public company,” though it will likely not be Contently’s last.
The high demand for content from brands was actually a bit of a surprise to Contently’s founders, Snow says, but the company is happy to go along with the trend. “We thought we were just riding the freelance train, he says,” but it has gotten so much bigger, to the point where it’s a realistic thing to build a company that owns a building and goes public.”
The key to that plan is Contently’s freelance management technology, which it licenses to brands to help them handle the process of commissioning content from journalists. There are 27,000 writers on Contently’s platform; 5000 have been approved as professionals. Most of Contently’s 40 enterprise clients spend more than six figures per year, including the licensing and the price of whatever content they commission on top of that, Snow says.
But the danger to doing something “hot” is that brands can sometimes act like lemmings. (I frequently hear this complaint from friends at agencies.) The minute a competitor launches some new trendy kind of campaign, they suddenly need it too, regardless of whether its effective, rational or a good use of money. It has happened with micro-sites, QR codes, “influencer marketing,” apps, various layers of social media, native advertising, and even the famous, not-repeatable Oreo’s moment from last year’s Superbowl. Not every brand needs to do all of this, but many are trying anyways.
The risk there is that brands may dive into content marketing without knowing what they’re doing, and then quickly retreat when it doesn’t work. Snow says he’s not too concerned with that because of the many success stories that have cropped up from brands (whether they are using Contently or doing content on their own). “Part of reason we do education is to help companies understand the best way to do it,” he says. The only backlash he sees from the whole “brands as publishers” trend is if the brands behave badly, i.e., “if people start doing unethical stuff and the Internet gets pissed.”
Aside from agencies and consultancies, two other companies in New York have been leaning toward this market as they’ve grown. Percolate, which has raised $10.5 million and has 60 employees, and NewsCred, which has raised $20 million and has 70 employees, both offer different ways to help brands produce content.