According to a TechNavio report, the worldwide marketing automation market is projected to grow at an annual rate of 8.2% from 2011 through 2015. Growth is driven by the increasing availability and adoption of SaaS-based marketing tools that help companies, both big and small, to automate their marketing solutions. While the market is dominated by offerings from giants such as Salesforce.com, there are also plenty of smaller vendors that are focusing on providing access to the SMB segment and seeing rapid expansion themselves.
Infusionsoft is one such marketing automation services provider. Gilbert, Arizona–based Infusionsoft was founded in 2001 by Eric Martineau and Clate Mask, whom I interviewed in 2011. Initially, the company developed Java- and web-based custom software for small businesses. During the course of their interactions with the SMB segment, they realized the need for creation of a software service that could integrate the multiple systems that SMBs used to manage their sales and marketing. Infusionsoft was born to offer a web-based solution that integrated automation with CRM, email marketing, e-commerce, and social media tools.
Unlike other players, Infusionsoft focuses only on the SMB segment. According to market reports, there are more than 27 million SMBs in the U.S. Of those, Infusionsoft caters to the needs more than 13,000 small businesses with 45,000 users accessing their systems worldwide, clearly signifying a huge opportunity for growth.
Infusionsoft offers a range of price points. Their basic package lets two users contact 5,000 customers and send out 500,000 emails per month. The package includes features such as web analytics and tracking, integration with social media tools, multimedia marketing, and contact management capabilities. They charge their customers a one-time starting fee of $1,999 and a monthly usage fee of $199 for this product. At a premium monthly fee of $499 businesses can choose to expand their services to 10 users, 100,000 contacts and 500,000 emails per month. The premium package comes with additional features such as hot lead sourcing, intelligent lead assignment, referral tracking, and commission management.
Like other private players, Infusionsoft does not disclose financials. Analysts estimate that the company recorded revenues of over $26 million in 2011. They are estimated to be recording growth of more than 50% each year and have been cash flow positive for year 2011. For the year 2012, Infusionsoft is said to have earned revenues of $39 million and are they are looking for an even higher growth rate in the current year. They have come a long way since earning revenues of $160,000 in 2002.
Infusionsoft has been venture funded with $71 million in investments from Mohr Davidow Ventures, vSpring Capital, Goldman Sachs, and Arthur Ventures. The funded amount includes the $54 million raised last month in a round led by Goldman Sachs. Infusiosoft plans to use the funds toward product development, sales and marketing, and international expansion.
Infusionsoft Acquires GroSocial
They already deployed an undisclosed amount for the acquisition of another marketing startup, GroSocial. GroSocial is a social media marketing company that provides web-based software to enable SMBs to build and track social media marketing campaigns across social networks such as Facebook and Twitter. Infusionsoft plans to integrate GroSocial’s social marketing tools with their marketing platforms so that the small businesses will be able to convert and track leads they generate through social platforms into customers. At the time of the acquisition, GroSocial had more than 30,000 users. The 19-employee organization was founded in 2010 and received funding of an estimated $2 million. Reports claim that the acquisition cost Infusionsoft anywhere between $25 million and $30 million.
It is unclear if Infusionsoft is looking to go public soon. For now, they are focused on building a high-growth business. Last December, Oracle acquired Infusionsoft’s competitor, Eloqua, for $871 million. At the time of the acquisition, Eloqua’s revenues for the nine-month period ending September 2012 stood at $68.8 million, and they had reported a loss of $7.6 million. Infusionsoft can hope for strong valuations for themselves as well.