Content is king: NewsCred raises $25M, its second monster round in 10 months
NewsCred has been on a tear the last 12 months. The company behind the hot content marketing platform has tripled its customer count, including the addition of a number of Fortune 500 companies, and increased its revenue by 400 percent in 2013, growing into what founder and CEO Shafqat Islam calls a “substantial double digit millions of dollars business.”
With these kind of stats, perhaps it’s unsurprising that the company has closed a $25 million Series C round, just nine months after raising a $15 million Series B that it’s hardly dipped into. The new round was led by InterWest Partners and will see InterWest’s Doug Pepper join NewsCred’s board of directors. In total, the company has raised $45 million, with prior backers including Mayfield Fund, Greycroft Partners, FirstMark Capital, IA Ventures, Lerer Ventures, AOL Ventures, and Floodgate. (Disclosure: Greycroft Partners and Lerer Ventures are investors in PandoDaily.)
The road for NewsCred hasn’t alway been paved with gold. The company is more than five years old, but in the early days it’s focus was on news aggregation. Two-and-a-half years ago the company decided to focus on content marketing and it’s been on a roll ever since.
“We didn’t wake up one day and say, ‘content marketing is gonna be huge and we’re gonna build a platform,” Islam says. “We iterated several times, but eventually started to see the signs. Brand marketers desperately need access to content and tools for utilizing it.”
Consumers expect relevant and engaging content from brands 24/7 on all platforms, Islam adds. That demand can be difficult to keep up with manually, for even the most well-funded marketers. According to Mayfield partner and NewsCred board member Rajeev Batra, the key to the company’s success has been the fact that it solves the two fundamental problems in the content marketing space – access to content and workflow management – whereas the competition only solves one or the other.
NewsCred gives marketers access to premium content through partnerships with 4,500 publishers including household names like the New York Times, Reuters, Gawker, Billboard, and Getty. The company also operates a freelance network that it calls NewsRoom to commission custom content based on specific brand needs.
According to Islam, the workflow problem isn’t exactly a lack of tools in the market, but rather an overabundance of disparate and overlapping products that don’t work together in a seamless fashion. It’s a tough web to untangle. NewsCred tackles this issue through its workflow platform which incorporates content sourcing, recommendations, publishing, distribution, and analytics solutions into a single interface
InterWest general partner Doug Pepper addressed the magnitude of the opportunity the company is chasing in a statement today, saying:
In NewsCred, InterWest sees an opportunity in the $44B content marketing space that is comparable to what we saw with companies like Marketo, Optimizely and Spredfast. By any metric – number of customers, revenue and mindshare – NewsCred is the definitive leader in an important new software category, driven by product innovation and thought leadership.
It’s Pepper’s Marketo experience that attracted Islam to working with InterWest, the NewsCred CEO says.
“Doug has spent the last two years looking closely at content marketing and, thanks to his involvement with Marketo, more than eight years working closely with CMOs and analysts in our space,” Islam says. “He lives and breathes this stuff.”
The big risk for NewsCred at this stage isn’t sustainability or even competition, its CEO argues. The company has approached profitability on numerous occasions, but each time it’s raised a new round and stepped on the growth accelerator. Islam believes NewsCred is more than twice the size of any company in the category in terms of customers and revenue. With $45 million raised at what one would assume is a healthy valuation, the primary risk now is that a modest outcome is no longer an option.
“We’re now on the express train and there’s no local stops,” Islam says. “We have to build a $1 billion business – that’s the expectation that we’ve set. But we welcome this because we believe the category is big enough.”
The company has no shortage of capital to put to work in search of this growth. But just because you can spend, doesn’t necessarily mean you should. NewsCred will need to balance the desire to swing for the fences and the need to choose its moments wisely.
For example, Islam’s vision for the company calls for it to eventually expand beyond just content marketing. He thinks the company can evolve into an end-to-end marketing platform, addressing its clients’ needs across content, social, email, and other marketing channels. This would put NewsCred in competition with corporate giants like SalesForce, Adobe, and Google.
“Are we going to build this overnight?,” Islam says. “No. But will we one day have the opportunity to tackle these other categories? Absolutely.”
Islam’s other concern stems from the deafening noise that currently engulfs the marketing technology ecosystem. One only needs to look at the latest Lumascape to understand his point. CMOs are confused and even paralyzed by the amount of choice out there, something Islam believes is unsustainable. Worse, a large portion of the market is selling a bill of goods on which it can’t deliver, something that hurts the credibility of everyone in the space.
“If there was a handful of tech companies out there targeting marketers, then the risk would be, can we build the best product?,” Islam says. “That’s an internal challenge and one I’m confident about. But there’s thousands of companies in this space and that’s an external challenge.”
On the upside, with this latest round NewsCred bought itself plenty of time and more advisory horsepower to see this market shakeout through. Islam expects that this will be the company’s last round of funding and predicts an IPO in NewsCred’s long term future. The company went from sputtering in the starting blocks to the zooming down the express lane in a matter of just two years. It won’t even take that long to learn whether it can keep up the breakneck pace.