Photo: Daniel Goodman via Business Insider
Last night we got to be flies on the wall at Yext when it announced some big news to its 85 employees:Yext raised $27 million at a $270 million valuation.
Investors in the Series E round include Rick Scanlon’s Marker, CrunchFund and existing investors Sutter Hill Ventures, IVP and WGI Group.
“This is a watershed moment,” CEO Howard Lerman explained to a the room crammed full of 20-somethings. “No one thought we’d be able to do this.”
That’s because 18 months ago, Yext spun out its profitable pay-per-call advertising business, Felix, and took a gamble launching an entirely new company. The new company, PowerListings, would update business listings across the web at lightning speed, and businesses would pay $499 per year for the service.
Felix generated $30 million per year with $6 million net to the company. “Most people would settle for a $100 million+ business,” Lerman told us. To test fate again with an unproven, new business seemed a little crazy.
But Yext PowerListings has done better than anyone could have predicted. PowerListings is already used by 50,000 paying locations. (If all of these clients are paying $499, it’s ~$25 million in revenue. Some of them are probably getting a discount, though.) About two-thirds of its customers are small businesses and the rest are chain stores. Since September, 950,000 business listings have been updated by Yext.
Lerman told the room that the $27 million validated Yext’s decision to spin out the new company all those months ago. The entire financing is for Yext PowerListings, not Felix.
As he broke the news, the room erupted in applause. Lerman joked that the money would be put towards executive bathrooms with gold toilets and Spanish banks.
It actually will be spent growing the business, starting with a big ad campaign that will let small businesses known how Yext can help them.