Urban Airship Nabs $5.4M from Foundry Group, Moving Full Throttle in Mobile Software Space

Anyone who says software startups don’t bring in big investment dollars anymore, clearly hasn’t been paying attention to Urban Airship.

Beyond being one of a new and interesting class of startups that are part software, part mobile, the Portland, OR-based company is bringing in some major financing, including its $5.4 million Series B round led by Boulder, CO-based Foundry Group.

The investment, being announced today, comes only six months after Urban Airship inked its initial $1.1 million investment from True Ventures, and Seattle-based Founder’s Co-op. Both initial investors also participated in the Series B. As part of the deal, Foundry Group managing director Jason Mendelson has joined Urban Airship’s board of directors.

So what kind of powerhouse business does a new software company have to be involved in to get such uncharacteristically large sums of funding in this age of bootstrapping, and cheap pay-as-you-go cloud-computing infrastructure for startups? Two words: mobile messaging. Essentially Urban Airship builds software that gives mobile providers and app developers the ability to power “push notifications.”

If you’re a smartphone user, you’ve more than likely received a push notification or two, and you might be wondering what’s so special about something that is, essentially, a text message? The answer is that push notifications are not really like text messages at all. While they may look like SMS messages, they are actually sent over the data network, not the voice network. This makes them cheaper to send, and means they can be received by customers even if the particular app on the mobile device it correlates to isn’t open—hence the term “push.”

Since the company was founded in June 2009, it has attracted some big-name clients, including Universal Music Group, Dictionary.com, Virgin Atlantic Airlines, Mashable, LivingSocial Deals, Newsweek, the Democratic Party, and fellow tech startups Tapulous, Gowalla, and Z2Live. In September, the company teamed up with another Seattle-based company, Ground Truth, to offer its services to the Verizon Developer Community, a partnership with chief executive Scott Kveton says has made Urban Airship the “preferred provider for network notifications across their network of over 100 million subscribers.” Saying the company has grown fast would be an understatement.

Greg spoke with chief executive Scott Kveton back in March, and got the skinny on how the startup erupted into the mobile world and inked some of its big initial clients (here’s a clue: their strategy heavily involved donuts).

At the time, the company had just hired on two new employees, for a grand total of eight. Kveton says Urban Airship has hired another six in the past six months, and plans to use its most recent funding round to double that number in the next year, “to hire folks to meet the demand of the products.” And Kveton fully expects the growth spurt to continue. “We’ll have plenty of room to house our continued growth,” he says. The company has just signed a shiny new lease for a 2,500 square foot building in downtown Portland.

The company has performed well enough to justify the new digs. Last March, Urban Airship had 1,600 customers. Today they have more than 4,000.

“Since we did our Series A back in February, things have really continued to take off for us,” he says. “What we have built is a mobile services platform that app developers and publishers can build into their apps, giving them the ability to more easily engage, and monetize on their platform. And what we’re finding is that our customers really like the ability to directly engage with push notifications, and monetize on a regular basis.”

To date, Urban Airship has facilitated the sending of more than 1.2 billion notifications. The company is clearly riding the wave of growth in the broader smartphone market. An estimated 77 million smartphones were sold in the third quarter, a 78 percent increase over the same period a year earlier, Kveton says.

“We’re sending around five to ten million notifications a day, and we’ve seen that growth really take off,” Kveton says.

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