Toronto startup Influitive plans to refine and expand its advocacy marketing offering after receiving US$3.75 million in seed funding.
Mark Organ
CEO Mark Organ said that the size and breadth of the funding, announced Wednesday, exceeded his expectations. A typical seed round for a company like Influitive ranges from $500,000 to $1.5 million, he said, but Influitive’s ability to raise more from a collection of 11 venture capitalists and angel investors throughout Canada, the U.S., Europe and Asia suggests a considerable appetite for the company’s product.
“It’s very reflective of the new reality of early-stage finance, particularly for a company that’s hot or interesting,” said Organ, whose previous venture Eloqua (a marketing automation platform) began trading last week on the NASDAQ Exchange.
Influitive’s primary product is AdvocateHub, a white-label software solution that companies use to recruit, mobilize and manage what Organ describes as “armies” of brand advocates. Influitive currently has about 46 clients, most of which are U.S.-based.
“It’s very unusual to see 11 VC firms investing what for them are relatively small amounts of money into a seed deal, and the amount of funding is also interesting, but I think it reflects the fact that it takes less money to get a company to scale,” Organ said.
Chris Fralic, a partner in one of the investment firms, First Round Capital, said in a release that Influitive has a “great opportunity” to build the next global marketing platform.
The company’s customer base is derived almost entirely from the business-to-business sector, which Organ said is by design.
“On the B2B side, there literally is no competition,” he said. “On the B2C side, there are a number of different players helping companies do what we call buzz amplification, Facebook fan page management and that kind of stuff. It’s crowded and, frankly, we know the B2B space well.”
Organ likened the AdvocateHub product to a “VIP hub” for brand advocates and promoters. It enables clients to create branded portals offering what Organ called a “game-like” environment that enables them to issue “challenges” to brand advocates – ranging from simple tasks like following the company on Twitter to more complex, multi-stage challenges that Organ likened to quests or missions.
These challenges can be tied into current events such as the Olympics or occasions like Valentine’s Day, and can reward advocates with prizes and “social currency” said Organ.
The AdvocateHub product is free until clients reach what Organ characterized as “critical mass” of users. The trial period is deemed successful when a company achieves a minimum threshold of 20 people advocating for its products and services on a consistent basis, with subsequent fees directly tied to the number of advocates.
Influitive currently has offices in Toronto and San Francisco, and plans to open additional offices in Boston, London and Singapore. Organ expects the company to be global by the end of 2013. Revenues are growing by more than 50% a month, he said, while the new funding will enable the company to become cash flow positive by 2014.
The funding will go towards the development of what Organ called a “game changing” mobile offering he hopes to have in market by the first quarter of 2013. The funds will also go towards development and scaling up distribution for the core AdvocateHub product, including hiring sales and marketing professionals and business development specialists.
