On the heels of backing the likes of BuzzFeed and Genius, Andreessen Horowitz is putting more money into digital content, this time with a technical and B2B angle. The VC is leading a $40 million round of investment in Stack Exchange, a New York-based startup that operates the Q&A site Stack Overflow as well as a host of other programmer-focused forums, with 80 million users monthly in total. Stack Exchange will use the funding in part to build out its business in areas like recruitment, as well as expand internationally with versions in Japanese, Russian, and Spanish.
The Series D round, which also had participation from existing investors Union Square Ventures, Spark Capital, Bezos Expeditions, and Index Ventures, puts the startup’s total amount of funding at $70 million.
Joel Spolsky, the CEO and co-founder, tells me that the company is not disclosing its valuation but tells me that it’s high enough that the company is no longer a likely acquisition target, and positions it for either an IPO or potential private equity deal. He would not be drawn out on what kind of timing either of these options would entail.
Stack Exchange, which was founded back in 2008 (a relative old-timer in today’s world of startups), has been steadily building out its business in a couple of areas that capitalise on its position in the developer and programming communities, and the funding will be used to help it double down in both.
Spolsky says that two-thirds of its revenues today come from recruitment services, via its Stack Overflow Careers site, and one-third from advertising.
The recruitment site serves as a kind of complement to the likes of LinkedIn. Programmers, he tells me, turn to sites like Stack Overflow Careers because they are already spending a lot of time on the company’s other forums, and therefore put more credibility into this than they would in LinkedIn, which he describes as overrun with contingency recruiters. “Developers have come to trust us,” he says.
The other third of revenues come from advertising, he says. “Big advertisers, companies like Microsoft marketing Azure for example, are specifically targeting users like ours,” he says.
When you have a grip on a vertical in the way that Stack Exchange does, you have to wonder whether the company will use some of that position to expand into other developer services, or potentially to visit the idea of expanding to adjacent verticals (eg, from programmers it’s not a huge leap to designers).
Spolsky says that for now the focus will remain where it is today, a place that currently sits in a complementary relationship with other developer-focused sites like HackerNews and GitHub. “I don’t see HackerNews or GitHub as competing against us directly for the same dollars or even the same attention,” he says. “Programmers use us for different things and they don’t really overlap. They are all in the developer attention space but so are a lot of other things like World of Warcraft. We’ve come to dominate getting answers just like GitHub is dominating social coding and version control.”