Zapier CEO Wade Foster avoids thinking about fundraising as much as possible. Profitable for years, his startup, which provides automation tools that connect applications together, is attracting a lot of interest from venture capitalists. Foster prefers to think of his customers, he says: museum tour guides, Etsy sellers and cafe owners who don’t have time to follow the latest tech buzzwords on Twitter, or capitals: venture capitalists. -risk have identified it as the next big thing.
“If you were to interview them and say, ‘Do you think you’re an expert in code?’ Foster said, invoking one of those fundraising terms, software without code, not what you’re talking about.'”
But the fact that Zapier didn’t play along (raising just $1.3 million in funding, going completely remote long before the pandemic trivialized it, and targeting a set of customers that many software companies overlook) has no importance. that means it hasn’t built a big business. Last summer, Zapier hit $100 million in annualized recurring revenue; he has already spent $140 million. And in January, investors found a way into the business, but not through Foster. Sequoia and Steadfast Financial bought $5 billion worth of stock from some of Zapier’s early investors.
Speaking for the first time, Foster said the transaction relieved the 2012-founded company to pursue a liquidity-enhancing event such as an initial public offering or sale for the time being. (The amount sold and the sellers were not disclosed; Bessemer Venture Partners, Threshold, Salesforce Ventures and Permanente Equity, based in Missouri, where Foster is originally from and recently moved, were among its original shareholders, according to PitchBook.) None of the founders. At the company he was involved in the sale with, Fosters says, “Personally, I’m a big fan of what we’re doing, I can’t do anything else with this money. If I had to withdraw money, the first thing I would do would be to look for more Zapier stock.
With over 300 app partners and connecting to over 3,000 apps, Zapier has charted a different growth path than the typical software unicorn. An example: customer service. A team of approximately 100 employees familiar with a variety of work applications work closely with Zapier’s small customers to ensure everything runs smoothly, an unusually large commitment for a company or customer the size of Zapier. from their typical contracts, which start free and cost up to $599 per month for all the bells and whistles like live support, still a far cry from the software licenses that can cost large companies millions. (Foster says that while teams within large enterprises now account for about 25% of revenue, most customers pay $19.99 or $49 per month.)
Zapier also created a $1 million small business relief fund a year ago for struggling customers as the pandemic spread. Foster predicts that after COVID-19, a new wave of small, family-style businesses with revenues between $5 million and $10 million will thrive after going digital.
Zapier’s recruiting and expansion software tools are also sparse and entirely driven by the company’s sales. Employees are eligible to receive bonuses on company earnings if they achieve certain milestones twice a year. “We never felt like our bottom line got in the way of our goal,” Foster says. The company on Monday announced its first acquisition of a no-code education company called Makerpad.
Now, with Sequoia and Steadfast on board, Foster plans to tap the networks and backing of some of those companies for portfolio companies, even though he’s spent years politely ignoring investors like Andrew Reed and Karan Mehandru. the senior associates of each of those who have purchased participate in this increase. When asked if he would consider funding college students or even a potential IPO, Foster replied “never say never.”
“For us, we have always viewed financial events, whether secondary, primary or public markets, as a tool in the tool belt. It’s something you can achieve as someone who runs a business that can help you when you need it.”