The Story Behind Influitive’s $38M Series B
Update: Wednesday, March 2 2016 – the Series B round has been extended by $8.2M, to a total of over $38M. Press release here.
Today, I’m excited to announce an important milestone in Influitive’s story: we’ve raised a $30.5 million “glocal” Series B round of financing, with both local Toronto and global elements, led by Canadian VC firm Georgian Partners.
This unusually large Series B also includes investments from some of Influitive’s key strategic partners, such as founders and CEOs of Marketo, Hootsuite, HubSpot and Gainsight, as well as Japan’s NTT Docomo Ventures Inc; crowdfunding innovator OurCrowd, which has nexuses in Israel, Australia and the UK; Massachusetts-based VC firm Atlas Venture; and the BDC Capital IT Venture Fund.
This round came together for one main reason: GROWTH! Influitive’s 37X increase in recurring revenue since our Series A in December 2012 has been fuelled by exponentially increasing demand for Influitive’s advocate marketing software, AdvocateHub, and an incredible team of people who inspire me every day with their hard work and creativity in exploiting our opportunity.
This growth is what gave us the luxury of considering a number of lead investors with attractive terms, and ultimately led us to our partnership with Georgian.
Growth: Belief in the idea of advocate marketing
The pervasiveness of the social web has transformed the nature of the buying process over the past decade. This, paired with the consumerization of enterprise software, has made the B2B technology space ripe for an advocate marketing revolution. The potential market for advocacy is virtually unlimited.
Advocate marketing is a discipline that helps businesses capture the enthusiasm of their customers, partners and fans, and turn that into a powerful force for igniting business growth. By mobilizing these evangelists, B2B marketers exponentially increase their marketing reach and revenue potential, while offering a superior buyer experience.
The idea of a comprehensive, advocate-centered, self-service platform for marketing is one I’ve been pitching to investors since founding Influitive in 2010. It’s an opportunity that I’ve been thinking about since 2005, when I was the CEO of marketing automation pioneer Eloqua and saw the impact of advocacy on that business. Even before the age of the social web, it was obvious to me that systematic social proof was a powerful and relatively untapped driver of growth for companies.
It is so gratifying to be able to continue to work on solving this problem so many years later. Influitive is the first company to run with this idea and deliver measurable value to hundreds of B2B companies:
- DocuSign’s advocates, for example, have influenced more than $3 million in sales pipeline through referrals and other advocacy activities.
- HP Software has engaged more than 1,000 IT service management customers in events, content creation and product feedback initiatives.
- In the first three months of using AdvocateHub, Blackbaud received a year’s worth of referrals from their advocates, while InsightSquared generated more than 100 genuine customer reviews on third-party websites like G2 Crowd, TrustRadius and GetApp.
Staying focused on our dual mission of providing the best possible advocate experience while driving pipeline success for our customers has kept our product on the right path.
Today, my 10+ year old idea is a reality thanks to the few hundred pioneers who took a risk not just by investing their budgets into advocate marketing before anyone else, but also by lending their precious time, social capital and reputations to advocate on Influitive’s behalf. Advocacy is not just what we sell. Advocacy is what we are and Influitive would not still be around today if it weren’t for our advocates supporting us day in and day out. They’re the real early investors.
These innovative marketers have proven that advocacy can fuel growth for the world’s best companies. Not only by implementing advocate marketing strategies at their own organizations, but also by helping Influitive grow our business through their acts of advocacy: in 2014, our advocates helped us achieve an annual average growth rate of 650% thanks in no small part to their referrals, references, reviews, success stories, social media engagement and more.
On behalf of the entire Influitive team, I can’t thank our advocates enough for their continued support. You can actually watch many of our customers, partners and investors explain why they’ve invested in advocate marketing — and why they’re advocates for Influitive — in these 50+ video clips that we compiled for this announcement.
Growth: Achievements by an incredible team
There would be nothing for our customers to advocate for without the people who have dedicated themselves to Influitive over the last few years. Since closing our Series A in December 2012, we have tripled the number of employees based in our official offices in Toronto, Boston, Palo Alto and San Francisco, as well as remote employees working from their home offices.
Influitive has one of the most sophisticated, experienced and complete Series B leadership teams in the marketing technology space — with a deep bench to bring forward in the future. Our new backers believe that this team can be counted on to keep delivering growth as a new multi-billion dollar marketing software category is being formed.
Some of our earliest and most successful customers have also joined our team because they believe so much in the power of advocate marketing:
- Vice President of Business Development, Chris Newton, formerly the VP of Marketing at Xactly
- Customer Marketing and Advocacy Consultant Deena Zenyk, formerly the Senior Advocate Marketing Manager at SMART Technologies
- Customer Marketing and Advocacy Consultant Liz Richardson, formerly the Social Media and Advocate Marketing Manager at Bomgar, where she was named Advocate Marketer of the Year and won Advocate Marketing Program of the Year in Influitive’s inaugural Best Advocate Marketing Awards
As we’ve grown from 30 people to more than 100 since our Series A, we’ve managed to maintain our unique culture.
Our employees have become some of our biggest advocates and their genuine advocacy will help us attract and recruit the next cohort of talented advocate marketing experts.
Growth: Attracting and vetting the right investors
If you had asked me after our Series A whether I thought our next round would come from Canadian VCs or Silicon Valley investors, I would have said the Valley—no question. Silicon Valley firms have the best reputation for providing the most value-add partnerships and the most attractive terms for companies like Influitive.
However, when my team and I began our exhaustive search and due diligence process to find the best possible investors, we decided to look beyond Sand Hill Road and Wall Street, reviewing close to 50 firms from around the globe, including those in Canada, the UK, Singapore, Australia and Japan.
We also vetted our VCs as much as they vetted us. I personally completed dozens of blind reference checks on potential investors and board members. I wouldn’t even consider a lead investor unless they spent at least full day meeting our team. I wanted to know:
- Do they really get the scale of our opportunity?
- Could they step in to actively help us execute?
- Would the lead partner fit in with our board culture and help our board attain the next level of performance?
It was a tough decision, but Toronto-based Georgian Partners proved to be the firm that performed best against our criteria. Their competency in analytics, sales sophistication, finance and SaaS operations efficiency makes them a valuable partner.
They also have an extensive network of fellow investors and potential customers they can introduce us to, with room to follow up in future rounds. Georgian is a respected firm that routinely beats the best Silicon Valley and Northeast growth equity firms for deals. Like us, they’re firmly rooted in Toronto, but they have global ambitions.
What I’m most excited about is that Simon Chong, co-founder and managing partner at Georgian, will be a great addition to our board of directors. He’s not just an investor; he’s a real operator who understands the unique challenges we face in building a hyper-growth SaaS company. He knows how to grow and scale a software company because he’s lived it before.
During our due diligence process, every single one of the CEOs of Simon’s portfolio companies consistently ranked him #1 or #2 on their list of all-time best directors. No other investor could beat that.
We filled out the round with other interesting and value-added investors from around the globe, such as Israel-based crowdfunding syndicate OurCrowd, Japan’s Docomo Capital and the BDC Capital IT Venture Fund. I’m so excited to welcome Georgian Partners, and all of our new investors, to the Influitive team.
It’s also important to note the high proportion of previous investors who exercised their pro rata rights and continued to invest in Influitive for our Series B, with several taking a super pro rata position. I’m humbled by the confidence that our investors have shown in advocate marketing, our team and our product. Thank you for staying on board.
Beyond the Series B: What’s next for Influitive?
We raised $30.5 million. Now the real work begins in scaling the company.
Influitive is hiring for 20+ new roles in four cities across North America to ensure we can continue our explosive growth. We will be investing in our existing products: AdvocateHub to handle larger companies and more varied use cases, as well as our Experiences product for leveraging advocates during events, and Communities, the most engaging community application for considered-purchase companies. We will be releasing more innovative products that are synergistic with our core offering to provide the most complete advocate marketing solution on the market. Influitive will also soon expand to other markets overseas to support our global customers and identify new candidates for growth.
It’s not going to be easy, but I’m confident we can achieve our goals because we have a lot of forces working in our favor. Most importantly, we have the support of our advocates: the marketers, investors, partners and employees who are helping us bring our vision to reality.