Smartsheet Raises $1.5M From Madrona, Riding Wave of Support from Google Apps Marketplace
Smartsheet, the Bellevue, WA-based collaborative project management software company, has raised $1.5 million more in a Series C round led by existing investor Madrona Venture Group.
The company, founded in 2005 by local entrepreneur Brent Frei, develops business software that helps companies oversee online project management, manage team-based collaboration, file share, and track outsourced tasks. The system, essentially, takes all of the components that go into different business processes—Excel spreadsheets, e-mails, computer files, to-do lists, discussion threads, customer information, schedules, workflow, etc.—and brings it all into one central management hub.
This latest round of funding brings the company’s financing total close to $7 million. Smartsheet’s last round, worth $1.25 million, was raised in January 2009 from Madrona and Frei himself, who said the money would help the company reach profitability in 2010. The privately-held company doesn’t disclose detailed financial numbers, but it has confirmed that it has started operating in the black.
“That’s the big milestone for us, busting through that cash flow positive,” says chief executive Mark Mader.
The most recent financing keeps Smartsheet on track to pursue its expansion plans, according to Mader. The company has maintained an 11-person staff over the last year, despite seeing its paid customer base nearly triple. And although he would not disclose the exact number of customers beyond being “in the hundreds of thousands” (the company reported having 65,000 registered users in 2008), he did say that its growth over the last year is a strong indicator of the business’s potential in years to come.
“Remarkably we’ve been able to scale the business and stay at that level. And our venture firm loves us because we’re very capital efficient. When you look at that early round, more than tripling the business and keeping the headcount the same is amazing,” he says. “A lot of fast companies send out releases on their traffic and what not, and that’s all fine and well, but I think the mark of paid customers is a more important indicator.”
The additional $1.5 million will be used to further expand the company’s app-making capability. Once those get developed, SmartSheet will continue pushing them through its proven distribution channels, such as the Google Application Marketplace, where it is currently ranked as the No. 1 app. While the Google App Marketplace has been a boon to SmartSheet, the company also has partnerships with other companies like Amazon, VMware, Intuit, and Jive Software, and expects to add Salesforce.com to the list in the coming weeks.
“This [round] leads us to a position where we can be confident and expand,” Mader says. He adds that the company is finally at a point where it can no longer manage its fast growth with such a small staff. He expects to hire as many as five new people over the next six months. “We’re not kidding ourselves—we’ve already started the hiring process,” he says.