Qualtrics, a decade old marketing research company in Provo, Utah has raised a $70 million first round of venture capital from Sequoia and Accel Partners. But this isn’t a growth financial deal, despite Qualtrics‘ age and the large amount. This is a deal that is designed to scale Qualtrics like a 2-year-old startup. For Qualtrics this means going from 200 employees to 450 employees.
Till this round of financing, Qualtrics has been a bootstrapped company and has declined investment since its founding in 2002. “In the early days when we were refusing to take capital I felt like the weird kid on the block,” Ryan Smith, chief executive and the founder of the company said. “I kept having to tell myself it was okay.”
So why now? “I wanted to turn one dollar into five, and only venture capital can help you scale like that,” Smith said. Most of the new cash will be spent on scaling up and hiring more people. The company is looking to add 250 jobs as of today across company’s operation’s to support two recently launched products Site Intercept and Qualtrics 360. He wants Qualtrics to expand internationally.
So what does Qualtrics do?
Qualtrics doesn’t disclose revenue, but Smith said the company has experienced “triple-digit-growth” and it certainly has a huge base of customers in academia and the enterprise. Qualtrics offers customers a way to get human feedback on their products. It began as a surveying tool used by academics and has since morphed into a SaaS-based analytics and data collection suite of products that can question customers, random passersby and even a company’s employees.
The common thread running through Qualtrics’ three products is a fast connection to a real-person and then turning the feedback from that person into data that can then be analyzed. It’s not a new problem for business, but the maturity of the web and targeting tools means that Qualtrics can perform surveys faster, cheaper and at the exact moment someone is encountering the product.
The venture capital community has been enthralled by big data companies and are looking for opportunities that go beyond a couple of million dollars and have established customer bases. This has given a shot-in-the-arm to many elder companies such as Qualtics and Vigilent, who are now raising VC money. Accel Partners has been particularly aggressive.
Accel, for example, invested in Code42, a Minneapolis, Minn.-based company that made backup and recovery software software for enterprises. It was another large-private company outside of Silicon Valley that scored a large round of investment to expand its product in ways that a growing web and better data analytics allowed.
It’s another way of looking at the investment opportunity associated with big data. Instead of new startups, VCs are investing in existing businesses that see a lot of information and then trying to layer an analytics or collection product on top of them. It’s kind of like a venture industry version of “upcycling.”