It’s official. To transition from a startup into a late-stage company that aims to be around for 100 years, Evernote today confirms it’s raised a $70 million Series D round of funding at a $1 billion valuation. Meritech Capital and CBC Capital were chosen to lead the round because they’re the firms that can help Evernote prepare for an eventual IPO.
Evernote doesn’t need the money. It still has much of the $96 million that it’s raised to date in the bank plus over one million paying customers out of its 25 million+ users. But now Evernote will have the cash to isolate itself from short-term market conditions. The Series D will also fund international expansion, including a push in China, strategic acquisitions, the development of business accounts and other features, and hiring of developers, designers, Q&A, and support.
But just because it’s maturing, Evernote has no plans of slowing down. I interviewed CEO Phil Libin about what the future holds for Evernote. He assured me “This funding keeps is us in the sweet spot to take risks. This is the most creative stage for the company.”
As information overload becomes more prevalent, Evernote’s mission to let you remember everything becomes increasingly relevant. The company offers a suite of Evernote web and mobile apps for saving files, images, web clips, and notes, and syncing them across devices. For a few dollars a month, user can upgrade to more storage space. Evernote’s real value comes in combining them into an app that lets you intelligently access saved content, not just store it.
Evernote competes with Dropbox, Box, iCloud, and Google Drive in cloud storage, Instapaper and Spool in web clipping, and Photoshop and Gimp in image editing as Evernote acquired image annotator Skitch last year. The wealth of established competitors indicate a challenge for Evernote, but also a clear need for its products. Libin tells me he doesn’t see competitors as Evernote’s biggest threat, though. “The most likely way we’ll fail is if we stop making good products. If we get defensive, we’ll lose focus on quality.”
Joining Meritech Capital and CBC Capital in the round and the company’s 100 year vision are funds and accounts managed by T. Rowe Price Associates, Harbor Pacific Capital, Allen & Company, and several other investors. Libin tells me “We’re thinking about an IPO within a few years, and are selecting investors and partners to help with that. They’re the types of investors that are buying into public companies, and we want to have as many relationships with them as possible.”
Regarding the impressive valuation as a private company, Libin excitedly admits that it’s not about Evernote being worth $1 billion today, but ”I agree with our very wise investors. I think that Evernote as a publicly traded company could be worth $10 billion, $100 billion or more.”
It certainly has momentum. In the nine months since it raised $50 million in July, it’s made four acquisitions, opened offices around the world, won a Crunchie, and grew to over 25 million users. Both registered and active user counts have tripled since July.
Update: Libin tells me “Conversion to premium goes up with the length of time someone’s been using Evernote. In the first month only a very small percentage, less than 0.5% of people pay for premium, but it goes up every month after that. Our “oldest” users, those that have been with us for about four years, are almost 25% paid premium. Overall, we have more than a million premium users.”
Bringing on CBC Capital, aka China Broadband Capital, as an investor will surely assist with the imminent launch in China. When that happens, expect Evernote’s user count to soar.
Now, Libin looks to make going public smooth and seamless. “We want as few things as possible to change at the IPO. I don’t what it to be disruptive or a goal, but just a step along the way. We’re focusing 100% of our energy into making the product better. The most important thing is that you trust us, and use Evernote for the rest of your life. Because if you do, we can ge the revenue out you. We don’t have to squeeze it out. That’s why the unit economics work so well and the business model is so profitable and attractive”
His voice filled with true passion for the company he’s built, Libin concludes, “Evernote is really about making you smarter. You use it, fall in love, and end up spending money.”
[Image Credit: Exame]