Convio provides online constituent relationship management (eCRM) solutions for nonprofit organizations. Founder Vinay Bhagat noticed the lack of automation and [high] member attrition rates while volunteering at a public television station pledge drive, and saw that the traditional nonprofit engagement channels of direct mail, telemarketing and individual solicitation suffered from limitations that often conflicted with the mission of the organization. Bhagat founded Convio in April of 1999, believing that the Internet could transform how nonprofits build relationships and raise funds.
When the Austin, Texas-based company was founded, nonprofits, given their experience with vendors, believed the only technology needed was a donor database. Most of the databases available at the time were designed by engineers to solve a problem, making the systems difficult to use and less intuitive than desired. Further, many organizations thought that investment in technology would rob mission programs and investments of money. Convio entered the market and introduced online constituent relationship management (CRM or eCRM) products to try to change these perceptions. The company claims that today, more than a dozen vendors to the nonprofit sector have adopted Convio’s CRM terminology and are using the Internet to raise millions of dollars in addition to their traditional fundraising efforts.
Convio’s open platform also allows nonprofits to expand their presence to social networking and new media sites. This, the company claims, makes it possible to extend the nonprofit’s brand, reach new people and raise more dollars. And though fundraising through some of these new channels is still small compared to traditional channels, the company says that there is now infrastructure that can “turn ideas into action”. Convio sells its products through a direct sales channel and derives its revenue from monthly subscriptions and services and, in some cases, usage fees.
Convio estimates the total available market for online marketing, fundraising and advocacy software and services at $2.8 billion and the market for Common Ground, its donor database/CRM system, at about $1 billion. Within the nonprofit sector, Convio targets mid-size to large organizations across numerous “vertical markets”. These vertical markets include organizations that focus on advocacy, animal welfare, arts and culture, disaster relief, social services, and health, as well higher education institutions, hospitals, and public broadcasting and radio organizations. More than 3,500 nonprofit websites are powered using Convio’s software.
The company claims to have helped nonprofits raise more than $777 million and send more than 2.5 billion email messages and more than 48 million advocacy calls to action in 2008. Further, its more than 1,200 customers include 30 of the country’s top 50 charities based on funds raised. Some of the company’s larger accounts are Susan G. Komen for the Cure, the American Red Cross, the American Diabetes Association and the Humane Society of the United States.
Convio earned revenues of $57 million for the year ended December 31, 2008 and achieved profitability on a non-GAAP basis for both the fourth quarter and for fiscal year 2008. Further, it generated $2.9 million in operating cash flow for the year, and $1.2 million for the fourth quarter. Convio says that it has produced positive cash flow from operations in five of the last six quarters.
The company acquired GetActive Software, another leading eCRM software vendor, in the first quarter of 2007. Prior to the acquisition, Convio raised nearly $38 million in venture capital: a $4.6 million Preferred Series A from Austin Ventures and Silverton Partners in December 1999; a $12.0 million Preferred Series B from Austin Ventures, Silverton Partners, Granite Ventures, and Adobe in March 2001; a $5.6 million Preferred Series C from Austin Ventures, Silverton Partners, Granite Ventures, and Adobe in February 2003; and a $15.1 million Preferred Series D from Austin Ventures, Silverton Partners, Granite Ventures, Adobe, and Adams Street in July 2004. After the acquisition, the Series A, B, C and D were converted into a combination of New Series A Preferred Stock plus Series B Common Stock. The New Series B Preferred Stock was used for the conversion of GetActive preferred shares. Convio raised $10.2 million in a New Series C from Austin Ventures, Silverton Partners, Granite Ventures, Adobe, Adams Street, El Dorado Ventures and Rembrandt Ventures in April 2007. The company went on to file for an initial public offering in August 2007 but withdrew the filing in 2008, stating that “good companies don’t go public in bad markets”. Convio wants to continue to operate based on the goal of executing a public offering.
This segment is a part in the series : Deal Radar 2009