Hootsuite is an enterprise-grade Twitter client that just raised a huge pile of cash. But a big chunk of that is going to help early investors cash out.
Via: flickr.com
The collective jaws of the Web dropped today on news that Hootsuite, a client that monitors social media networks for large companies, announced it was raising a large round of funding.
The surprise didn't come from the fundraising round, but rather the amount that the company raised: $165 million. Even for an enterprise-grade company, that is an enormous amount of money typically reserved for the likes of a massive build-up in infrastructure or headcount, and somewhat unusual for a company approaching around 250 employees.
The reason the round is so large, however, is quite typical to startups: a chunk of the investing round will be used to cash out early investors and provide liquidity for owners of the company, Accel Partners partner Ryan Sweeney — which invested in the current round — told BuzzFeed in an interview. Though, he wouldn't say exactly how much would be used to help existing investors cash out.
"It's not atypical for these growth-stage rounds, so there's some liquidity," he said. "Part of this transaction is cleaning up that cap table and surrounding them with good people. You're resetting the clock — though it's not all for liquidity, we're putting money on the balance sheet in a very significant way."
Hootsuite gives larger companies a way to monitor what consumers are saying about the company on various networks like Twitter, but also Facebook, LinkedIn and others — even Pinterest, for example.
"If I had to sum it up for you, this is fundamentally the way we believe companies are going to communicate with individuals," he said. "It's gonna bypass email, and Hootsuite is powering that."
