Vista Equity takes majority stake in SaaS startup Drift, raising it to unicorn status – TechCrunch
Private equity firm Vista Equity Partners announced today that it is taking a majority stake in Derivative, a company that aims to be the Amazon of business, with a “growth investment” that propels the venture-backed startup to unicorn status.
Unfortunately, neither party disclosed the amount of the investment or Drift’s new valuation. But co-founder and CEO David Cancel said the SaaS company saw 70% annual recurring revenue (ARR) growth in 2020 compared to the previous year and was on track for a similar measure this year. It is not yet profitable, because it is focused on growth, he added.
Prior to this funding, Boston-based Drift had raised $ 107 million from Sequoia Capital, CRV and General Catalyst since its inception in 2015.
So what exactly is the company doing? The startup says it’s ready to “reimagine the B2B shopping experience,” according to Cancel. Using its software, Drift’s 50,000 customers are able to bring together sales and marketing teams on a single platform to “deliver personalized conversations” that the company says build trust and accelerate revenue.
Its clients include ServiceNow, Okta, Grubhub, Mindbody, Adobe, Ellie May, and Snowflake, among others. Today, 75% of Drift’s customers are mid-sized companies, according to Cancel.
Over the past five years, Drift worked to create and define something he describes as “conversational marketing” with the goal of helping marketers “leverage the digital experience for lead generation.” Or to put it more simply, Drift subscribers can use chatbots to turn web visits into sales.
The company says it seeks to eliminate friction between buyers and sellers so that they can not only get more leads, but also close more sales. This has led Drift to focus more on creating a platform that includes conversational sales, which integrates chat, email, video, and artificial intelligence to fuel conversations, not just on the website. of a customer, but also for the sales team.
Cancel said Vista’s strategic growth investment will help the company go even faster, grow globally, and launch a new B2B category called “Conversation Commerce,” an interactive approach to conversations that, according to Drift, has the potential to “transform the entire B2B revenue function”.
Basically, the business is trying to make the B2B buying / selling experience similar to that of a B2C. TO at least 80% of B2B buyers not only research, but expect them to buy experience similar to that of a B2C customer, according to Cancel.
So far In 2021, Drift’s customers generated $ 5 billion in pipeline value by facilitating the customer side of the buying process, he said.
For Cancel, a serial entrepreneur who previously founded and sold four other companies, the idea of owning a business with a unicorn valuation was not something he and co-founder and CTO Elias Torres were too engrossed with.
But what wowed the couple was the opportunity to add to the too short list of US-based unicorns with Latin founders and serve as inspiration for other entrepreneurs of Latin descent. Cancel’s parents emigrated from Puerto Rico and Cuba while Torres emigrated from Nicaragua as a teenager.
“I didn’t care about that [unicorn] status except for one reason and the reason was that we are both Latinos and if we hit that milestone then we would be among the less than 1% of Latinos who had ever done so, ”Cancel told TechCrunch. “And that was important to us because we believe we have a responsibility to pay it forward and help people and inspire others who are like us and are often marginalized. We want to show that they can do it too.
Torres agreed, saying he and Cancel were “proud to be one of the only Latino-founded companies to ever reach a valuation of over $ 1 billion – a rare unicorn founded by Latinos.”
“We want to see more of us do the same and we will pave the way for other Latino founders and leaders to be successful,” he added.
By having a majority owner in Vista, which focuses exclusively on supporting enterprise software, data and technology-based enterprises, Cancel believes that Drift can “get more efficient in some areas.” He also believes the company can help him speed up the pace of his acquisitions. (So far he’s done three.)
The company of nearly 600 people still intends to go public, according to Cancel, and believes that working with Vista will have a “clearer path” to do so.
“It’s something we think about a lot,” he told TechCrunch. “It’s still in our future.
Monti Saroya, co-head of the Flagship Fund and Senior Managing Director of Vista, believes Drift represents a “compelling” opportunity for Vista.
“Drift is a large scale hyper-growth company, we believe and believe that the conversational marketing and sales tools it offers will continue to be in high demand as companies rush to modernize their B2B commerce strategies.” , he told TechCrunch.
Earlier this year, Vista – which has more than $ 77 billion in assets under management – invested $ 242 million to acquire a minority stake in Vena, a Canadian company focused on the enterprise performance management (CPM) software space.
Meanwhile, Vista’s acquisition of Drift is expected to be finalized in Q4 2021.