Denver-based software startup Gtmhub announced this morning that it has closed a $120 million Series C. Index Ventures led the round, with a number of prior investors contributing as well.
Before its new investment, Gtmhub had raised just over $40 million in total, making its Series C around triple its prior aggregate capital base.
The OKR software market that the startup competes in has had a busy year, helping make the huge round more understandable than it is when simply compared to Gtmhub’s far-smaller Series A and B rounds. Competitor Ally sold to Microsoft, and rival WorkBoard raised a $75 million round earlier in the year.
Most recently, smaller OKR player Koan shut down, eventually selling to Gtmhub. TechCrunch’s prior notes regarding the OKR software market’s rise here and here provide more context.
TechCrunch caught up with Gtmhub COO Seth Elliott to chat about the round, and how quickly his startup may be able to grow next year.
Why raise $120 million?
Math, in part, per Elliott. It was time for Gtmhub to raise more capital, but given venture mathematics, it could not have raised a much smaller amount, he said. In a $50 million investment, Elliott explained, there wouldn’t have been “enough pie to go around.”
Translating that a bit: New lead investors like Index want to secure a material ownership position in their new portfolio company. And prior investors want to use up as much of their pro-rata rights — the ability to defend valuation percentages in successive venture rounds — as possible, which means that for companies of a certain valuation mark, smaller rounds become an impossibility.
No, Gtmhub is not sharing its valuation in this round. And sadly, Crunchbase and PitchBook lack other data points for us to lean on, but we’d be surprised if the startup wasn’t nearing unicorn status after its Series C. The implication of the math point and the round size itself imply that Gtmhub enjoyed a healthy new valuation in its latest round.
How did the company manage to raise more capital after announcing its Series B this January? Growth, according to Elliott.
The COO told TechCrunch that Gtmhub expects to triple its revenues this year, and perhaps achieve the same growth rate next year. The new capital will help support that goal.
Looking ahead, the OKR space is diverging somewhat between players. WorkBoard spends its time discussing its enterprise clients, for example. Gtmhub, in contrast, told TechCrunch about its longer-term plans to grow from a corporate planning software concern — OKR stands for objectives and key results, a Silicon Valley-standard corporate planning process — into something more proactive, perhaps leveraging company data to help customers identify “inflection points” and become more guiding than merely supporting in time.
That work won’t come cheap given the cost of machine-learning talent in today’s market.
The OKR market
Along with corporate spend, the OKR market may be my favorite startup cluster to track these days. Not only does it feature a number of well-funded startups competing directly, but we’re also already seeing smaller players shake out and Big Tech firms take note. Tracking how WorkBoard and Gtmhub perform in 2022 will be fascinating.
Given their historical growth rates, if they have a good next year, each will become at least something near to an IPO candidate in 2023. Bring it on.