Marketo made simultaneous announcements this week that the company has surpassed the 500 customer mark in just two years, and that it has closed $10 million in Series D funding to further accelerate the company’s rapid growth curve.
Phil Fernandez, president and CEO of Marketo, said the company added 119 new customers in the first quarter of 2010. He told DemandGen Report that the company has set an internal goal to grow its customer base to 1,000 by the end of the year, which would require it to step up its already rapid growth rate to an average of more than 165 per quarter.
“We continued to see our business accelerate in Q1, and believe that we now have the leading share of business among all lead management automation vendors,” said Fernandez. “Our vision of transforming the way companies grow revenue is resonating with businesses of all sizes.”
A sampling of the new companies who have signed on with Market in Q1 include:
- Apparent Networks, a leading provider of network performance and availability solutions;
- Conformity, a provider of a comprehensive management solution for cloud applications and users;
- Emptoris, a pioneer in strategic supply management and enterprise contract management software solutions;
- Security Innovation, an authority in the software and crypto security industry, providing secure software lifecycle management products, services and training to Fortune 500 companies;
- OHL, one of the world’s largest third party logistics providers (3PL) providing supply chain solutions and services.
The new investment was led by Mayfield Fund, with participation from existing investors InterWest Partners and Storm Ventures. With the $10 million investment, Marketo has now raised a total of $32 million, of which Fernandez said the company still has “more than half” of those funds in the bank and plans to continue to “invest in technology and support infrastructure to deliver even higher levels of success to our rapidly growing customer base.”
To illustrate its commitment to investing in its product suite, Fernandez pointed out that a year ago Marketo had approximately 11 people working in R&D. The company now has 28 people working in development and he said the new investment will help expand that roster to 40 people by the end of 2010. He pointed out that Marketo’s customers will begin to see the fruits of that labor within the next four weeks, when the company launches a new analytics application designed to give robust forecasting capabilities to BtoB marketers.
While competitors have knocked Marketo for having a high burn rate, Fernandez countered that he could pull a switch and have the company operate profitably this year, but that would come at the expense of investing in the product and the company’s growth. “Not only are we growing faster than any other competitors in the space, but when it comes to our customer acquisition costs, we have an extremely strong model,” he said. With all acquisition and start-up costs loaded we are typically positive within 6-8 months after adding a customer.”
Asked about the M&A space heating up following Salesforce.com’s acquisition of Jigsaw, Fernandez pointed out that Marketo would be an unlikely candidate to be “picked off tomorrow” as the company would command a premium price point given the considerable investor base it and its rapid revenue and customer growth. However, he did not rule out Marketo being an acquirer of another complementary space that would bring additional functionality to its product suite.
Fernandez also left open the possibility of Marketo pursuing a public offering at some point. “Having been involved in successful public offerings at my last two companies and can certain see that we are lining up for that,” he said. He added that the company has done analysis of other high growth SaaS companies which have had successful offerings, “and we are growing as fast as any of them and our trajectory lines up very favorably.”