This morning, Utah-based SaaS startup Podium announced that it has closed a $125 million Series C led by Y Combinator’s Continuity fund, with participation from Sapphire Ventures and Alkeon, and Recruit Co. Ltd. Prior investors IVP, GV, Summit, and Accel also took part in the funding event.
Notably, the venture round wasn’t put together back in Q4 2019 only to be announced now. Instead, according to Podium CEO Eric Rea, discussions began in mid-February, resulting in multiple term sheets. The startup signed the winning contract toward the end of the month, and both YC and Sapphire followed through with the money. Rea praised the pair of investors in a call, citing their “integrity” for following through with the deals sans chicanery despite the U.S. economy falling off a cliff after terms were reached.
The Podium round, then, is one of the last put together before disruptions stemming from COVID-19 shook the domestic economy and stock market. Let’s explore, then, why Podium was able to raise the money before the crisis, and what it’s up to now that the world has changed.
Podium’s software service that provides messaging tools for small business has grown rapidly, allowing the company to both attract capital and expand its offerings. As TechCrunch reported in March, the company has expanded into payments, allowing its SMB-skewing customer base to more quickly accept payment for goods and services.
Since launch, Podium’s payments transaction volume has been around twice what the company expected, the CEO told TechCrunch. Asked if payments would constitute a small, secondary revenue stream or a more material income that could rival its more traditional SaaS offerings, Rea placed it in the second category.
Podium’s growth is worth writing down in aggregate, based on both our prior reporting and new information from the company. Here’s the growth that the startup’s new payments revenue is now helping to continue:
- $12 million ARR around the time of its $32 million May, 2017 Series A
- $30 million ARR around the end of 2017
- $50 million ARR around the time of its $60 million November 2018 Series B
- Expected to reach $60 million ARR by the end of 2018 (unclear if it met that timetable)
- $100 million ARR around the end of 2019 (as previously projected; confirmed this week by TechCrunch)
Past giving a valuation peg and confirming that it met its 2019 goal of reaching $100 million ARR (plus or minus a month is our read of the achievement), Podium didn’t share more. So, we don’t know precisely how large it is today. But we do know that investors paid less than a 15x revenue multiple for the firm.
That almost feels cheap in a pre-COVID-19 mindset. Now, in the new reality, it seems like a fair price.
So, what’s ahead for one of Silicon Slopes’ brightest lights? Free stuff, it turns out.
Along with its fundraising announcement, Podium told TechCrunch that it is rolling out a free tier of its service, called Podium Starter. The company is doing what a number of tech firms are, namely offering parts of their technology at zero cost to people and businesses that might need it; here’s Boston’s Drift doing something along similar lines, for example. Podium Starter’s wait list is live today, with the startup promising to offer the service to “every local business in the United States” in time.
But before Podium put together a free tier to help the suddenly flailing economy, it was seeing big growth; Rea told TechCrunch that the first few months of 2020 were record-setting. Then, of course, things changed for the economy. So where does that leave Podium, which has a big footprint with small businesses?
The company is upbeat, noting that as many individuals are avoiding face-to-face communication, messaging tooling fits the moment. As does its payments service, as folks don’t want to exchange money in person. What will happen to the firm’s growth rate, of course, isn’t clear. It seems doubtful that the startup will continue to grow as it did before while the economy remains depressed.
But, no dip is forever, and Podium has never had more money than it does right now. That should help it survive the downturn. We’ll check back with the company in a few months when it may have new data to share.