According to the investor fueling Pendo’s $25 million Series C, announced today, the four-year-old product management software startup from Raleigh is “one of the best late stage tech companies in the universe.”
From its website, Meritech Capital Partners of Palo Alto is pretty clear about its ambitions. It’s not looking for seed deals or raising billion plus dollar funds. The fund run by six partners all with deep experience running companies or in investment banking wants only to place bets on companies it believes can have the next big technology IPO.
That means the team works fast to get its money in the right place.
So fast, that negotiations with Pendo began around the first week in June, when I shared a cab with Pendo CEO Todd Olson on our way to the 3686 South conference in Nashville.
While Olson didn’t share any specifics around his fundraising efforts, he made it pretty clear that raising capital was no problem and in fact, it’s coming in even faster than planned.
More difficult, he shared with me and later from the stage at the tech conference, is finding the right leaders and talent to scale the company as fast as the funds will allow.
Now that’ll be really critical as Pendo attempts to grow its engineering team in Raleigh—in the pipeline are additions to the Pendo APIs that allow for more integrations and partnerships. More product development will help ramp up sales even faster than the quadrupled revenue that came in last year. The employee count hit 100 in May, and Olson hopes to add another 50 people over the next six months. Besides engineering, they’ll be focused on sales and customer success.
Help will also come from talent-rich New York and San Francisco, where Pendo will add offices to be closer to its customers. Olson told me in an email today that the funding could also allow Pendo to make some strategic acquisitions. He explains the growth plans in the video below:
In a news release, Meritech’s Rob Ward, a new Pendo board member, says his firm was drawn to the huge market that Pendo can serve with its software. Nearly every company can use the software Pendo is building.
He wrote: “Today, all successful companies need to be in the software business, and all of them need to care about their product experience. (…) At Meritech we seek category-defining companies, and Pendo is well on its way to becoming a market leader as evidenced by its fast growth and incredibly enthusiastic customers.”
Some of the headlines listed on the Meritech website gives some examples of those successful category leaders:
Largest Silicon Valley Ed Tech Acquisition Ever, referencing Meritech portfolio company Lynda.com, which sold to LinkedIn for $1.5 billion in 2015.
Largest Pure Play Ecommerce IPO In a Decade, shouting out Meritech portfolio company Zulily’s $253 million IPO.
Largest Enterprise Tech IPO in 2013, citing Tableau Software’s 2013 IPO, which far exceeded pricing expectations.
and, Largest Tech IPO in 2012 (and History), referencing none other than Facebook, another Meritech portfolio company.
The Series C brings Pendo’s total capital raised to $56 million, with $45 million coming in the last six months.
Olson admits it was unexpected and not totally necessary to achieve the goals Pendo has set. But more investors helping connect Pendo to more customers means greater sales and more innovation, which fuels more local hiring and more prestige for the Triangle’s startup scene.
“I think we have a real shot to create a significant company,” he says. “Success in startups is a lot about timing. Our market is hot, so the timing is quite good. Now, it is all about execution. This further investment allows us to stay very focused on execution to fully realize our potential.”