Thanks to a frantic bidding war between East Coast and West Coast venture capitalists, New York startup GroupMe is raising a round that will put its valuation close to a whopping $30 million, multiple sources tell us.
GroupMe is the service that lets you text a group of people using one phone number.
We think the product makes sense for groups as disparate as parents who want to text all their kids, dispatchers trying to reach delivery people, fantasy sports managers trying to talk trash to their entire league, and so on.
Growth of the service, according to one source, is “nuts – thousands of per cent.” We’re not sure what that means, but it sounds good.
Venture capitalists who turned the startup’s series B into a bidding war include firms on the west coast such as Sequoia, Andresseen Horowitz, and Khosla Ventures. East coast firms General Catalyst, Flybridge, and Union Square Ventures made their interest known, too.
How intense is this scrape? We understand one VC flew to New York over the weekend, and arrived at a GroupMe principle’s doorstep around 9 P.M. one night.
Union Square Ventures walked away from the deal because it viewed GroupMe as too similar to Twitter, another portfolio company.
(USV partner Fred Wilson declined to comment.)
Twitter itself looked at acquiring GroupMe before deciding it could replicate the service internally.
A current favourite for the deal, we’ve heard from a couple sources, is Khosla Ventures. The firm is ready to bid GroupMe’s valuation up to $33 million. Khosla could not be reached for this story.
Other firms still in it include Massachusetts-based firms General Catalyst and Flybridge.
GroupMe’s series A investors Betaworks and First Round Capital got the company off the ground with a $700,000 investment earlier this year. Those firms are likely to participate in this second round.
GroupMe declined to comment.