Influitive has raised $3.75 Million from 11 investors for the company’s customer advocate platform that helps companies generate qualified leads and shorten buying processes.
Founder Mark Organ said the unusual seed round is illustrative of how the venture capital community is getting more engaged in smaller deals.
“It’s a huge seed round,” Organ said in an interview yesterday. “It could be called a seed preferred round.”
Organ said he raised money on both coasts. He leveraged Angel List. Seed funding came from the likes of venture capital firms such as First Round Capital, Lightspeed Ventures, New Enterprise Associates and Relay Ventures.
Influitive’s business model reflects the new world of online customer advocacy that has emerged in the past several years with the rise of the read/write web. Blogs, Facebook, Yelp – they’ve all provided the foundation for individuals to rally around businesses that they believe in.
These people are as much in the business to business community as they are in the consumer world.
With Influitive, clients initially set up an “AdvocateHub,” which serves as a branded portal that advocates visit to learn how they can market the company and help build an ecosystem that drives referrals.
In exchange, advocates receive rewards from the sponsor companies. This may be a bottle of wine or free access to a user conference. The goal is to get the advocates interacting with the company.
The service has a certain degree of gamification involved. Fill out a survey and you get some points. Follow the company on Twitter you get some more points.
Organ said Eloqua did three institutional rounds of investment. With Influitive, the first round is yet to come.
Venture capitalists are willing to put in a lot less money and not take a board seat. Instead, venture capitalists are sitting in board meetings as observers.
This reflects the realities of the new economy. It takes a lot less money to take a company to scale.Distribution is affordable. VCs have to get in early and build a tiht relationship so they can later do the $50 million round they dream of.
Cindy Padnos is the founder and managing partner at Illuminate Ventures. Her firm invested in Illuminate. She says her firm liks to work with companies that have raised $1 million but are not quite ready for a Series A round.
“I am seeing more entrepreneurs who are doing that,” Padnos said.
The competitors Influitive faces will come from the social CRM space. The challenge will be attracting the right advocates who are doing it for the love of the business more than the excitement of rewards.