Infusionsoft rakes in $54M to automate marketing for small businesses

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Marketing automation continues to be a bright spot in tech. Infusionsoft, which offers integrated marketing automation software for small businesses, just netted a cool $54 million in a new funding round led by Goldman Sachs(s gs) with a contribution from Arthur Ventures.

The Chandler, Ariz.-based company, which offers a SaaS suite comprising both CRM and marketing automation to small companies, will use the new money to educate small businesses about the value of an all-in-one SaaS suite and to add functions to CRM and lead generation services, Infusionsoft CEO and Co-Founder Clate Mask told me.

Infusionsoft CEO and co-founder Clate Mask.
Infusionsoft CEO and co-founder Clate Mask.

In November, Hubspot, another marketing automation player, netted $35 million in mezzanine funding and just before Christmas, Oracle(s orcl) said it was shelling out $871 million to buy Eloqua, another, more enterprise-focused, marketing automation vendor. All of these vendors aimto help customers find and qualify leads — from online or other ads, from Facebook(s fb), from Twitter and other sources and convert them into actual sales. Many companies now use a hodgepodge of different processes and products for this purpose.

While there is some contention with Hubspot, Infusionsoft targets smaller companies — those with 25 employees or fewer and more than $100,000 in annual revenue — of which there are an estimated 27 million in the US alone — while Hubspot focuses on the bigger companies in the small and medium business (SMB) market, Mask said.

Infusionsoft offers these companies CRM integrated with marketing automation — the practice of culling and promoting leads. “On the CRM side we compete with and Zoho while on the marketing automation side we see Marketo, Eloqua and Hubspot. “But we’re the only sales and marketing company that is 100 percent focused on truly small businesses — of which there are 27 million in the US alone,” Mask told me in an interview.

Doug Burgum, founding partner of Arthur Ventures and the executive who led Microsoft’s(s msft) business applications group, will advise Infusionsoft, Mask said. The company has 350 employees but plans to staff up to more than 1,000 over three years .

campaignbuilderThis round brings total funding to about $74 million. Other, earlier, investors include Mohr Davidow Ventures and Signal Peak Ventures.

There’s been a lot of talk that chief marketing officers (CMOs) will soon control more IT spending than CIOs. I’m not necessarily buying that contention — especially since many of those stories seem to be written by CMOs, but it’s clear that marketing departments have their own budgets so tech vendors that can speak their language and offer value could do well. As long as that’s the case, don’t expect this category to calm down anytime soon. Feeding that fire, Mask said to stay tuned for an Infusionsoft acquisition in the coming months.

7 Responses to “Infusionsoft rakes in $54M to automate marketing for small businesses”

  1. Based on U.S. Census Bureau Data, WorldBank estimates and SMB Group estimates there are:

    – SOHO (1-4 empl, no commercial location) – 136M worldwide / 16.5M in the US.
    – Small (1-99 empl, commercial location) – 65M worldwide / 6.53M in the US.
    – Medium (100-999 empl) – 705K worldwide / 99.9K in the US.

    27M sounds a little overestimated.

  2. brettfogle

    What is also interesting is that 95% of their users that we talk to are frustrated and unhappy with InfusionSoft’s technology. It’s confusing, and has earned them the nickname ‘ConfusionSoft’ among users and potential users. So we have decided to enter the marketplace as a competitor for this reason.

  3. You make it sound like fundraising is the objective, as opposed to customers. I’d be more impressed if Infusionsoft generated $1M in profit, grew revenue and customers by 200%, or any other true measurement of how their business was really doing. So what a PE group gives them money to do advertising. Yawn.

    • Here is why I find knowing about VC funding to be valuable.

      I’m always looking for upcoming companies to invest in. VC funding can be an important indicator of companies intentions long term as many VC funded companies will ultimately try and go public. I put many of these companies on my watch list so if they look like they will have a good IPO I can be involved.

      In looking for products for myself and my business VC funding can be an indication of potential life span of the product. No one wants to build their business around a product that won’t be around very long. A big influx of money like this in my opinion improves the odds that the company will be around for several more years and that they will continue to work on and support their product.

      Also despite what you may think VC firms tend to expect some traditional performance when investing in a company. Your comment peaked my interest so I did a little research on Infusionsoft. A quick web search for “Infusionsoft revenue” shows $26 Million in revenue in 2011 and a search for “Infusionsoft customers” shows 8,000 customers in 2011 with 3000 new customers being added that year. I would assume that 2012 has been a similar if not better year given this investment.

    • i don’t always believe stats but i do believe there are tens of millions of small businesses in this demographic (25 and fewer employees, $100K+ in annual revenue) so at least in terms of market target Infusionsoft is interesting. This is also a very large round of funding and i think VC interest in a company warrants an investment that big, it’s worth pointing out.