Kapost, VictorOps Raise Rounds to Keep Up Growth

Two different Boulder, CO software startups, two different ways to finance growth.

Kapost raised $10.25 million in an equity round it announced Tuesday. Its neighbor a few blocks away, VictorOps, also disclosed it raised a $2.575 million round through convertible debt.

Kapost makes software that companies use to manage business-to-business content marketing campaigns. It includes features that allow collaborative work, setting schedules, and publishing and distributing the finished product.

The investors in the new round were Access Venture Partners, a Colorado-based firm, Salesforce Ventures, Cue Ball Capital, and Iron Gate Capital, which all made their first investment in Kapost. Kapost’s prior investors, High Country Ventures and Lead Edge Capital, also joined. The company now has raised a total of $19 million.

“Content is the backbone of everything marketing does to engage buyers throughout their journey. Kapost is the engine powering the entire content lifecycle, from the first idea to improving performance,” Kapost co-founder and CEO Toby Murdock said in a release.

As content marketing has grown, so has Kapost. The company wouldn’t discuss its revenue, but spokesman Dan Schacter said it is seeing 100 percent year-over-year revenue growth and has 120 clients. They include some big names: LinkedIn, IBM, and Dell.

Kapost is a Techstars grad. Originally its vision was to create software that publications such as newspapers and magazines could use to plan their coverage and manage stories through the publication process, a legacy that can be seen in the company’s legal name, Daily Inches Inc. The company now has 80 employees and plans to grow to 100 by the end of the year.

VictorOps took a different approach in raising its money, opting to do a convertible debt instead of an equity round to raise $2.575 million. It did so quietly, choosing not to issue a release after it filed its papers with the SEC.

Co-founder and CEO Todd Vernon said the startup had planned to sell equity to venture investors this spring, but its leadership and board decided to postpone the round. That can suggest a company is experiencing difficulties, but not in VictorOps’ case, he said.

The approach was driven by a desire to wait until VictorOps can get a better deal and a bigger valuation, Vernon said. The loan will give the company the cash it needs to keep growing in the interim.

“Things are going awesome, which is why we did this,” Vernon said. “We were planning to raise money in the spring, but we are experiencing 100 percent quarter-over-quarter growth, so everyone decided to postpone raising until the fall, when we’ll get a much better valuation based on the current run rate.”

Five new investors came on in the round, Vernon said.

VictorOps develops software that IT admin teams use to troubleshoot and fix problems. It pitches itself as something for those who “carry the pager” that “makes being on-call suck less.” The latest version of the software can inform team members of problems, set up conference calls and online collaboration, track and try to diagnose what’s wrong, and even suggest solutions.

The goal is to create the best solution for what Vernon calls “real-time collaborative problem solving” when servers crash or a network goes down.

“It’s a problem all SaaS [software-as-a-service] companies face,” Vernon said.

An equity round is in VictorOps’ future, Vernon said. It is likely to come in the fall or winter and be in the $10 million to $20 million range. The company has raised a total of $10.66 million since it was founded in 2012, including a $6.5 million Series A round. It employs 35 people.

Vernon is the co-founder and former CEO of Lijit, the company that eventually evolved into sovrn, an adtech company based in Boulder. As head of Lijit, Vernon oversaw its early growth, several VC rounds, and eventual acquisition by Federated Media for a reported $100 million.

Trending on Xconomy