Enterprise file-sharing service Huddle has just raised a whopping $24 million led by Jafco Ventures.
Huddle co-founder Alastair Mitchell said he plans to use the funds to keep up with “phenomenal” demand.
But Huddle was already profitable last year and brings in around $25 million annually. Why would it raise funds?
We caught up with Mitchell to find out why. Here’s what we found out:
- Huddle is raising the money to go back into heavy growth mode. The company already had cash, but raising funds will help it grow more quickly. Huddle has tripled in size every year.
- Huddle’s enterprise sector is five times larger this year than it was last year. It’s on track to be eight times larger by the end of the year, Mitchell said.
- Huddle has had several acquisition offers, but it’s turned them all down. Mitchell said he is intent on building a big software business and it’s on track for an IPO.
Here’s a lightly edited transcription of the interview:BUSINESS INSIDER: Why did you guys decide to raise this huge round of funding?
ALASTAIR MITCHELL: It’s basically to keep up with demand. We don’t need to have the money to keep up cash flow. We’ve tripled in size every year since we’ve grown, but the demand we’ve seen is phenomenal. We’ve growth 5x in the enterprise sector last year. Users who are buying Huddle in their teams and departments, they are loving it.
In the last 6 months to a year there’s been a huge pull from the top saying actually, we don’t want to deploy this to small teams and across the organisation. We want to displace the existing legacy software we have.To give you an example, we just planned to renew with one of our biggest customers, they grew from 100 users to 3,000 in 8 months. They ripped out and replaced their SharePoint instance. These are big deals led by the CIO, saying we want Huddle to deliver content collaboration that’s to our users, that has the scale and security and support for our needs.
BI: Any chance you guys have been speaking with other companies about a potential acquisition?
AM: We’ve had several offers in the last year alone, we’ve turned them all down because we’re building a big software business. We might be taken up, but our current path is that we’re on the path toward an IPO. We have faster growth rates than most of our competition. We’re an international business, we’re co-headquartered in London and San Francisco. We’re seeing international growth and also in the U.S. We see ourselves as a big business IPOing in the next few years.
BI: What are you guys planning on using the funding for?
AM: We’ve traditionally needed to spend less because Huddle grows so virally. That’s still the case, we want to spend more on marketing, but this is also keeping up with demand. We’re hiring a bunch of developers and there are a lot of new features we want to deliver for the enterprise. We’re seeing so much demand from our large customers for new services. We have more leads than we know what to do with, that’s why we’re opening new offices.
We’ll be 200 employees by the end of the calendar year, that’s decent growth. The year after that we’ll probably double again. We’re adding a lot of heads in a lot of different places. We’ll have an office in Washington D.C. this year as well, because the government is a big part of our customer base.
BI: What are some of the sectors where you are seeing the most growth?
AM: The large customers grew 5x last year and are on track to be 8x this year. In terms of sectors, collaboration is a completely horizontal activity, but there are some sectors picking up faster. Anywhere where you have a group of people, collaborative-rich organisations, you see more pick up. Anything from marketing and sales, to human resources, professional services, government, those are all about collaboration and content. Financial Services is starting to spin up, investment bankers are the hardcore guys — they’re usually the last part of the game. They’re very much in on-prem mode, but they’re starting to come about.