Vista Equity Partners, a private equity firm, announced today that it will take a majority stake at Drift. Drift is a company that aims to become the Amazon of business and has a growth investment that will propel the venture-backed startup towards unicorn status.
Unfortunately, neither the investors nor Drifts' new valuation would reveal the amount. David Cancel, co-founder and CEO of SaaS company Drifts, stated that the company experienced 70% growth in annual recurring revenues (ARR) in 2020 over the previous year and is on track for another similar number this year. He said that it is not yet profitable as the company is focused on growth.
Drift, a Boston-based company, had previously raised $107million in financing from Sequoia Capital and CRV since its 2015 inception.
What exactly does the company do? Cancel reports that the startup claims it wants to revolutionize B2B purchasing. Drifts customers can use its software to connect sales and marketing teams. This allows them to have personalized conversations, which the company claims will build trust and increase revenue.
ServiceNow, Okta and Grubhub are some of its customers. Others include Adobe, Mindbody (Mindbody), Adobe, Ellie May, Snowflake, Mindbody, Adobe and Mindbody. According to Cancel, 75% of Drifts' customers today are mid-market enterprises.
Drift has been working for the past five year to define Conversational Marketing. This is a way to help marketers harness the digital experience to generate leads. Drift subscribers can also use chatbots to convert web visits into sales.
Drift claims it wants to eliminate friction between buyers, sellers and close more deals. Drift was able to focus its efforts on building a platform that includes conversational selling. This integrates chat, video, and artificial intelligence to enable conversations not only on the customer's website but also for the sales team.
Cancel stated that Vista's strategic growth investment in Vista will allow the company to move faster, expand internationally, and launch a new B2B category called Conversation Commerce. This interactive approach to conversations is believed to have the potential to transform B2B revenue.
The company aims to make B2B selling/buying easier than it is for B2C customers. Cancel reports that at least 80% B2B buyers expect a similar buying experience to a B2C client.
Drifts customers have generated $5 billion in pipeline value so far in 2021. This is because they make the buying process simpler for customers, he stated.
Cancel is a serial entrepreneur, who has previously founded and sold four companies. The idea of owning a company valued at a unicorn was not something that he and his co-founder, Elias Torres, were too excited about.
The opportunity to be part of the growing list of U.S.-based unicorns founded by Latin founders was what attracted them. Cancels' parents immigrated from Puerto Rico and Cuba, while Torres came from Nicaragua as a teenager.
Cancel said that I didn't care much about the [unicorn] status, except that it was because we were both Latino. If we reached this milestone, we would become one of less than 1% Latinos to have ever achieved that feat. We felt that this was important because we believed that we had a responsibility to give back and inspire others who are marginalized and like us. We want them to know that they are capable of doing this.
Torres also agreed and said that Cancel and he were proud to have been the first Latino-founded company to achieve a valuation of more than $1 billion. This is a rare Latino-founded unicorn.
He said that he hoped to see more Latino leaders and founders do the same.
Vista's majority owner, Cancel, believes Drift can become more efficient by having Vista focus on enterprise software, data, and technology-enabled companies. It has so far made three acquisitions.
Cancel said that the company, which employs nearly 600 people, still wants to go public. However, Vista believes it will give them a better path.
He told TechCrunch that it is something they think about often. It is still in our future.
Monti Saroya is co-heading the Flagship Fund, and senior managing director at Vista. He believes that Drift offers Vista a compelling opportunity.
Drift is a company experiencing rapid growth at scale. We believe that the conversational marketing tools and sales tools it provides will continue to be highly sought after by companies looking to modernize B2B commerce strategies. He told TechCrunch.
Vista, which manages over $77 billion of assets, invested $242 million earlier this year to purchase a minority stake at Vena, a Canadian company that specializes in the Corporate Performance Management (CPM), software space.
Vistas' acquisition of Drift is expected in the fourth quarter 2021.
