Hootsuite, a 4-year-old social media dashboard for businesses, has closed a $165 million round of funding at an undisclosed valuation. The round was led by Insight Venture Partners, a seasoned New York-based firm that pumped late-stage money into Tumblr and still holds a substantial stake in Twitter.
Hootsuite plans to use its excessive cash hoard to hire, expand internationally, and make acquisitions in the social ads and analytics space, CEO Ryan Homes told CNET. In addition, the exorbitant raise includes a secondary component of an undisclosed amount, meaning that a portion of the funds will go directly to company insiders and not to the actual business.
At its core, Hootsuite provides small, medium, and enterprise businesses with a dashboard tool for managing their various social media accounts and team members. Though seemingly simple in purpose, Holmes said that the product addresses an unavoidable challenge for today's businesses, many of which now use Facebook, Twitter, and other services as customer support channels.
"It's not always the most sexy things that necessarily are driving high valuations and showing high worth," Holmes said. "Our product solves pain...We're like a social media Switzerland. We sit between Twitter, Facebook, LinkedIn, and 30 other social networks. We can give you insight into where you're having the most effect in your day-to-day social media messaging. That's highly valuable for people."
Hootsuite's product, which is offered on a freemium basis, has 7 million users, though only 3.5 percent of those are paid subscribers who fork over anywhere between $10 and $1,000 per month to use the service. Hootsuite's upper echelon enterprise clientele includes Pepsi, Sony Music, HBO, and 237 of the Fortune 500.
The massive raise is meant to keep the still relatively small Hootsuite, which has more than 300 employees, competitive with larger players, such as Adobe and Salesforce, that have been snatching up social media management and analytics companies to serve enterprise clientele. Holmes said the money also takes the pressure off a public offering.
The Series B round included participation from notable Facebook investor Accel Partners and existing equity holder OMERS Ventures. Jeff Leiberman of Insight Venture Partners, Ryan Sweeney of Accel, and John Ruffolo of OMERS have joined Hootsuite's board of directors.
Hootsuite had previously raised around $25 million, though $20 million of that came from a secondary arrangement, a.k.a. an equity-for-insider-cash-out exchange, with OMERS.