Automattic Raises $160M To Catch Up With The Web’s Evolution

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Automattic, the company behind WordPress.com and the open-source WordPress platform, today announced that it has raised a $160 million Series C round from Insight Ventures, True Ventures, Chris Sacca, Endurance, Tiger and Iconiq.

That’s a massive funding round for WordPress, especially given that it hasn’t taken funding since 2008 and at that time had “only” raised $12 million. The reason for this, Automattic CEO and founder Matt Mullenweg says, is that when he took over as CEO earlier this year, he realized that WordPress was actually capital constrained.

“Only a year ago, I said ‘Automattic is healthy, generating cash, and already growing as fast as it can so there’s no need for the company to raise money directly — we’re not capital constrained,'” Mullenweg writes today. But today he knows better.

WordPress finds itself in an interesting spot these days. According to some stats, it powers 22 percent of the world’s top 10 million websites (including TechCrunch). But it’s also at an interesting inflection point in its history. What was a basic and easy-to-install blogging software platform a few years ago is now becoming a more fully-featured content management system.

That history is also a becoming a burden, however, because the software wasn’t designed for this kind of use case. This shift happened organically as users and designers took the open WordPress platform and started adding more functionality on top of it. Just compare any commercial WordPress theme today with one from just two years ago. This is what allowed it to grow, but it’s also grown more complex in the process. Today on the platform, you can run anything from a single-page landing page to a professional magazine-like publication with millions of users.

So instead of just competing with other blogging platforms today — which seem to have plateaued as simpler platforms like Tumblr and Twitter have taken off — it is now going up against companies that offer basic website building tools for small businesses. Think Squarespace, Wix and Weebly. All of those companies have recently raised funding themselves. WordPress itself has slowly added support for new verticals like restaurants, hotels, schools and musicians lately, but it hasn’t made a huge push to switch up its backend or features to support these. For the most part, the company simply added new themes to support these use cases directly (thanks to its theme support, these weren’t use cases the platform itself didn’t offer before).

Despite these efforts, though, WordPress never seemed to be interested in monetizing these use cases directly. The core features on WordPress.com, after all, are available for free. Users only have to pay if they need advanced tools like their own domain names, the ability to upload large amounts of images and video or to modify their CSS code.

It looks like this could change now if WordPress aims to use this new funding round to set itself up for becoming a more profitable company that won’t need additional outside funding. Chances are WordPress will always stick with its freemium model, but there are definitely many parts of the platform that it could better monetize going forward, especially as it starts getting deeper into different verticals.

Mullenweg believes that by being an open-source company, WordPress has a significant advantage over its competitors, which are mostly closed source. This is what allows it to offer its users a massive number of plugins and themes. At the same time, it also puts a large burden on the company as it tries to satisfy such a broad range of use cases. Talking to Re/Code, Mullenweg notes that to stay ahead of the competition, “We have to keep up the innovation. It is a massive market we are aiming at.”

With this massive funding round, WordPress will now have the ammunition to keep pushing back against its competitors and to focus on some of the lucrative verticals that these other companies are focused on pursuing.

Image credit: Flickr user mkhmarketing under CC 2.0 license