ExactTarget lands another $75M in funding

Chris O'Malley
December 3, 2009
Back to TopCommentsE-mailPrintBookmark and Share

E-mail marketing provider ExactTarget has in a short span landed what may be a record amount of venture funding for a private company here—$75 million since October.

And that’s on top of the $69.9 million it received in May from three venture firms on the coasts, in what was the third-largest venture deal in the nation during the second quarter, according to the National Venture Capital Association.

That’s a total of $145 million in a mere six months, and from venture-capital firms on the coasts who’d otherwise struggle to find Indianapolis on a map.

“For a private institution” locally, “that’s got to be a record. It validates their business model in a huge way, especially in this economy,” said Bruce Kidd, an Indianapolis venture veteran.

“It’s one heck of a testament for the Indianapolis tech community. It really shows it’s not ‘about location,’” said Scott Dorsey, co-founder and CEO of ExactTarget, a 9-year-old company that now employs about 500.

Dorsey isn’t boasting: ExactTarget didn’t even bother to announce the latest two rounds: $5 million in October and a $70 million round Nov. 20, according to U.S. Securities and Exchange Commission records.

The closest the company came was an announcement last month that David Yuan, a principal of Silicon Valley venture firm Technology Crossover Ventures,  had joined ExactTarget’s board “following an investment” in the Indianapolis company.

Only last year ExactTarget put on hold plans for an $86 million initial public stock offering as the stock market tumbled.

Even with the massive new infusion, “we really feel that we can better execute our plan in the short-term as a private company,” Dorsey said.

“If you can raise that amount of money and stay private—all the better,” Kidd said.

Still, it’s interesting to note the pedigree of Technology Crossover Ventures, which Dorsey said is the source of the latest $70 million investment.

“Since its inception in 1995, TCV has guided more than 40 companies through initial public offerings and currently has more than $7.7 billion under management,” ExactTarget said Nov. 20 in its brief announcement that Yuan joined its board.

For example, TCV in 1999 made its first of what would be a $55 million investment in the early years of Netflix, a veritable unknown at the time but which later grew to become the nation’s largest online DVD rental service.

Netflix completed an initial public stock offering in 2002. TCV made additional investments, including $75 million in open-market stock purchases of Netflix in 2006.

Palo Alto, Calif.-based TCV also has invested in such companies as Expedia.com, Orbitz.com parent Travelport Ltd. and RiskMetrics Group, a New York company that owns Institutional Shareholder Services. 

An earlier, $69.9 million round of investment in ExactTarget last May involved three venture firms: Foster City, Calif.-based Scale Venture Partners, Owings Mills, Md.-based Montagu Newhall Associates and Battery Ventures, which operates chiefly out of Waltham, Mass. and Menlo Park, Calif.  Principals of Battery and Scale also joined ExactTarget’s board.

It’s a long, long way from 2000, when Dorsey, Chris Baggott, Peter McCormick and Bob Compton tried to explain their concept of e-mail marketing to potential investors.

“They couldn’t even raise $1 million,” recalled Kidd, now a senior vice president at Indianapolis-based Walker Research, who admits to scratching his head at just what the entrepreneurs were proposing to do back then. 

ExactTarget’s software as a service model provides a cost-effective way for companies to market their products to customers who consent to being contacted via e-mail. It may be ExactTarget client Papa John’s e-mailing a coupon to loyal customers frequently ordering a pizza from the chain’s Web site, for example.

In a recent application of ExactTarget’s technology, passengers of the Orange County (Calif.) Transportation Authority can send text messages to the agency to receive e-mails of arrival times for the next three buses for a particular bus stop.

But one of the areas ExactTarget is most zeroing in on is the red-hot social-networking market.

For example, ExactTarget’s clients can send their customers e-mails embedded with social-networking icons, such as Facebook. The recipient’s friends on Facebook can share the coupon. That friend then becomes another potential candidate for ExactTarget’s client.

So far, the Indianapolis company has more than 3,200 clients. Most pay between $10,000 and $150,000 in subscription fees. The client portfolio is  diverse, with the largest representing only 3 percent of its business. The large client base and recurring revenue steam is like some reliable annuity to some investors, explaining some of ExactTarget’s allure. The company also boasts of more than 30 quarters of successive revenue growth and three straight years of profitability.

Between 2004 and 2008, revenue soared 524 percent from $11.6 million to $72.3 million, according to Deloitte’s “Technology Fast 500” ranking, which listed ExactTarget as the nation’s 254th-fastest-growing company.

Dorsey said the venture proceeds will go toward developing new services, hiring additional sales staff and making acquisitions. In September it entered Europe by acquiring London-based Keymail Marketing.

ExactTarget, with headquarters at 20 N. Meridian St., started the year with 375 employees but should end the year north of 550 on the payroll, said Dorsey, a native of Chicago.

Indianapolis tech firms often never make a blip on the radar of venture firms on the coasts if only because often investors “just don’t know about this market,” said Kidd, former director of entrepreneurship and small business at the Indiana Economic Development Corp.

The success of ExactTarget in drawing widespread attention from the coasts “is one of the several tipping points we need to have,” said Kidd, who just returned from a trip to the Silicon Valley for Walker.

“We can build these kinds of companies here.”


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. This is still my favorite Mexican restaurant in town. What I do love about the new version is it is much quieter than the most recent version. TV's were off, the music wasn't too loud, and the wait staff were not hyperactive like they had been the past few times I had been there. I just wish they would bring back the MOLE for the enchiladas!

  2. Not a bad paper. There is a need for local community news and city government issues. Don't really need the owner's constant national political rants. We all know where they stand by now.

  3. What nice people. Menard should've known better than to team up with the guy who robbed and drove Conseco to ashes. I'm surprised Timothy Durham isn't involved in this.

  4. Hello, I am Maris Peters, currently living in Texas city, USA. I am a widow at the moment with three kids and i was stuck in a financial situation in August 2014 and i needed to refinance and pay my bills. I tried seeking loans from various loan Companies both private and corporate but never with success, and most banks declined my credit. But as God would have it, I was introduced to a Man of God a private loan lender who gave me a loan of $65,000USD and today am a business owner and my kids are doing well at the moment, if you must contact any firm or company with reference to securing a loan without collateral , no credit check, no co signer with just 2% interest rate and better repayment plans and schedule, please contact Mr William David. He doesn’t know that am doing this but am so happy now and i decided to let people know more about him and also i want God to bless him more.You can contact him through his email: Davidloanfirm@yahoo.com

  5. It is beyond me how anyone can think this was a "bad deal" for the state! If they could take the money back then, yes, but they can't! Protections were built in the agreement. Now, if they roll the roads up and take them away, I will agree that it was a bad deal. Otherwise, the only way to have paid for the infrastructure that was badly needed was for the state to issue bonds....that is a four letter synonym for debt folks!!