by Nick Hedges, CEO & President, Leads360 Inc
February 3, 2012 — As many of you may have seen, we just announced a significant milestone in Leads360’s evolution, a $15M series B round from Volition Capital and Rustic Canyon Partners. We are very excited about what this means for our customers and partners as well as Leads360’s future and wanted to share the back story on the B round.
Why we raised the money?
Simply put, we are seeing unprecedented demand for our software, and want to capitalize on this by investing in building out our team, our product and our marketing efforts over the next several years. That’s because as our product offering and the market has evolved, what we do adds value to a quickly expanding number of companies.
Back in 2004, when Leads360 started out, our software was designed to help companies efficiently manage leads that they were buying from companies like LowerMyBills and LendingTree. Over the past few years we have seen a few things occur:
- Companies that were buying leads have realized they need a better approach to manage all of their sales opportunities, not just internet-bought leads. Now more than half the leads we help manage are generated by the customer organically.
- A large number of companies that sell to consumers have realized that CRMs like Salesforce, Oracle and SugarCRM are extremely poorly suited to their needs. We recruit companies on a daily basis who are better able to manage their sales process with our software either instead of or alongside their existing CRM systems.
- Consumer sales organizations are far more successful when their sales platform is tightly integrated with their telephony systems. Our sales telephony platform, Dial-IQ, has been exceptionally well received by the market.
What made Leads360 a good investment opportunity?
We were fortunate to have many highly-regarded investors interested in Leads360. Here are a few of the things that made Leads360 a very attractive growth company.
Sales automation for companies that sell to consumers is a large and under-served market -Leads360 is the market-leading solution
In 2010, US companies spent approximately $35B on advertising aimed at generating consumer leads according to the Direct Marketing Association. Leads360 has the market-leading solution designed specifically to help these companies to convert those leads into customers.
Companies that sell to consumers need software that helps them track, interact with and convert their prospects. Unfortunately there are very few software solutions designed to do this. While there are a lot of companies that provide “sales automation” software that provides this type of functionality very effectively for companies that sell to businesses (good examples are Salesforce, SugarCRM and Oracle/Siebel); selling to consumers is very different. Big CRM is a bad solution for consumer and small business sales teams. In a consumer sale, due to short sales cycles and a need to work a much larger volume of prospective customers per salesperson, speed of response, tight sales process definition and multi-channel prospect nurturing are much more important than they are in the business-to-business sale. Unfortunately we see a lot of companies misguidedly purchasing a CRM solution and then spending a huge amount of time and money customizing the solution to handle a consumer sales process; functionality the Leads360 has right “off-the-shelf”. With our new funding we intend to generate broader awareness among companies that sell to consumers about how our products help their sales teams be more successful at converting consumers into customers.
Our telephony platform (Dial-IQ) has created a huge amount of value for both us and our customers
At the beginning of 2011 Leads360 released a comprehensive outbound telephony solution called Dial-IQ. We saw the opportunity to build a more intelligent dialing system than any that had previously existed using the data we had access to in the sales automation platform to place calls at the appropriate time and from the most “qualified” sales rep.
Dial-IQ has exceeded our wildest expectations in terms of the value it has had to our customers and the number of customers we have gained as a consequence of the platform.
Our average Dial-IQ customer achieves a 77% increase in conversion within 90 days of turning on Dial-IQ and about a third of our entire customer base has already opted to use Dial-IQ as their sales telephony platform.
Large enterprise customers are adopting the Leads360 platform at an unprecedented rate
We have seen a very significant increase in demand for our product among Fortune 1000 companies over the past 18 months. This is partly due to a significant re-engineering effort on our platform to deliver the functionality that very large, often highly dispersed sales teams need to be more effective. What we have built is deeply configurable, highly scalable and easily integrated into a complex enterprise-scale technology infrastructure. We wish to pursue large customers with even greater vigor on both a domestic and international stage going forward. To that end we will be expanding our enterprise marketing and sales efforts considerably and building out deeper channel relationships as a consequence of the funding.
How we chose our new investors
We’ve had an outstanding experience with Rustic Canyon Partners whom we raised our $5.25M A-round from in 2007 and were excited but not surprised they were keen to participate in our B-round. In looking for our lead in the B-round we had a pretty tight set of parameters about which investors we wanted to raise money from.
- They had to have a singular focus on growth stage Software as a Service companies and
- We were looking for a clear track record of helping businesses cross the $100M revenue mark.
Choosing Roger Hurwitz from Volition Capital was a very easy decision for us. He brings an amount of experience to the board about what it takes to build a world-class SaaS business that we have come to recognize as being exceptionally rare.
What all this means
We have a product that is in a league of its own at automating and accelerating sales for companies that sell to consumers by phone and email. We are very excited to have the capital necessary to make that fact common knowledge and to continue building out our world class product, team and strategic partnerships.