IPO Prep: HubSpot raises a $35M mezzanine round and adds board expertise
With IPO bells tolling, and 8,000 customers in 56 countries, inbound marketing software company HubSpot has raised $35 million in a mezzanine financing round from Altimeter Capital, Cross Creek capital, and other previous VC investors and new public company investors. The investment brings the company’s total outside financing to an even $100 million since 2006.
HubSpot is a multi-faceted platform designed to eradicate “interruptive marketing” by replacing it with compelling content. The company has long offered a suite of lead generation, lead management, marketing analytics, blogging, social media publishing, and email campaign management tools. The recently launched HubSpot 3 took this existing functionality and added social segmentation, landing pages A/B testing, an app and service marketplace, and a mobile app, among other features.
Despite its late stage startup status, the company does not appear to be slowing down any, with revenue growing at 80 percent over the last year to an annualized run rate of $60 million currently.
The company’s employee count expanded by one third over that time to more than 400 individuals, including the launch of a European headquarters in Dublin, Ireland – a common location for US corporations due to its favorable tax status. The company plans to add another 55 bodies by the end of 2012. $10,000 referral fees have made the recent hiring spree one of the most interesting things about the company, leading to rampant poaching from other Boston tech companies and a meme battle breaking out as a result.
For those unfamiliar with the term mezzanine, it typically describes a convertible subordinated debt instrument used to finance later stage growth companies, and can often convert into preferred rather than common equity. Although the company would not confirm this fact explicitly, it’s entirely possible that this will be the last round prior to an IPO. The company says that it will begin disclosing select financial figures, a rarity among private companies, and that it is building a board of directors with this listing inevitability in mind.
The latest addition is NetSuite CFO Ron Gill who is joining the company’s board as the chair of its audit committee. HubSpot has added a number of additional strategic hires this year including former State Street VP Global Infrastructure Services, Risk, and Compliance Management Chris McLellan as its Chief Security Officer; former Akamai CFO JD Sherman as its COO; and former Endeca SVP and General Counsel John Kelleher as its General Counsel.
Previous VC investors which were not explicitly tied to this latest round include General Catalyst, Matrix Partners, Scale Venture Partners, Sequoia Capital, Google Ventures, Salesforce.com, and Charles River Ventures.