SEOmoz, the Seattle-based provider of online marketing software, has raised $18 million in venture financing to fuel its expansion in the growing sectors of social media, online publishing, and search engine optimization.
The profitable company, always refreshingly open about its performance, says it doubled revenue last year to $11.7 million and is projecting revenue growth to around $20 million for 2012.
With a few more years of that kind of growth, CEO Rand Fishkin says, SEOmoz could wind up being one of the Seattle tech industry’s next generation of public companies.
Other companies that have gone public with a similar business model—subscription-based software-as-a-service—have been in the $60 million-$80 million annual revenue range, Fishkin says.
“It could be maybe 2014, 2015 we’re on the phone talking about what might an IPO look like, which would be awesome,” he says. “Seattle needs more of those.”
The fundraising round was led by Brad Feld’s Foundry Group, the well-known VC firm based in Boulder, CO. Previous investor Ignition Partners also participated in the round announced Tuesday. SEOmoz’s previous financing was a $1.1 million investment from Ignition and Curious Office in 2007.
Fishkin was looking into other possible VCs for a new fundraising round when he got in touch with Feld, who actually had been corresponding with Fishkin’s wife Geraldine about her well-read travel blog.
Fishkin was hoping to get some fundraising advice—he had tried to raise additional VC rounds twice before and came up short, blogging extensively about the process both times.
This time around, there wasn’t much time to write about the twists and turns involved: only about a week elapsed from the first conversation with Feld to agreeing on the terms, Fishkin says. (Update: Fishkin has now laid out, in typically extensive detail, the backstory of this financing round on his blog.)
And while Feld is often known for early stage companies, the more established SEOmoz made sense for a couple of reasons, Fishkin says.
First, Feld and Foundry have invested in startups with similar business models, including e-mail infrastructure provider SendGrid, and e-mail certification and reputation monitoring company Return Path. But Foundry also likes to invest in companies that have a strong, loyal following and customer base. SEOmoz has 15,000 paying subscribers, and a monthly Web audience of more than 2 million, which includes a very committed online search engine optimization and marketing community.
The two also just seemed to hit it off and really understand each other, Fishkin says.
“I feel like Brad’s the kind of person that, if we worked in a restaurant together, we’d go out for beer every night after our shift. There’s nothing inauthentic about him,” Fishkin says. “And no offense, but that’s not common in the venture capital field. There’s a lot of layers to people, and a lot of psychological barriers that investors put up that they can’t be themsleves in front of entrepreneurs.”
SEOmoz plans to use the new financing for a range of growth initiatives, including hiring and a new office, technical assets in both products and infrastructure, and perhaps even some small acquisitions in areas like social media, Web analytics, or even some SEO.
Feld will join SEOmoz’s board, and co-founder and president Gillian Muessig—Fishkin’s mom—plans to retire. And one final note for this family-owned business: Fishkin and Muessig plan to use some of the money they got from cashing out a few shares to buy out his grandparents’ mortgage.
