“This new investment gives us a war chest in excess of $70 million,” Fernandez said. “We plan to use these funds aggressively to expand our award-winning product suite, further extend our global reach and look beyond our four walls to complement our own innovation engine.”
In 2011, Marketo has more than doubled its revenue, opened its EMEA headquarters in Dublin and launched Spark by Marketo, a new product solution specifically designed for the SMB sector.
The San Mateo, CA-based vendor was founded in 2006 and now has 240 employees. Fernandez projected the company would finish next year with nearly double that total.
While Marketo’s competitors applauded the fact that investors were stepping behind the industry, they also took the opportunity to question why Marketo would raise more just one year after its last round. Eloqua CEO Joe Payne wrote on Eloqua’s blog that Marketo’s recent launch of a low-cost product for the SMB would put the company squarely against other competitors like HubSpot, which, he argued, would be a costly move.
Payne argued that “acquiring low-margin customers” will be an expensive strategy.
“When you compete against HubSpot, you’re not only competing against a well-funded, well-oiled ‘inbound’ marketing machine — you also compete against Salesforce and Google, each of whom recently made strategic investments in the company…To beat HubSpot + Salesforce + Google + a whole host of others, they are going to need every cent,” Payne said.
Some analysts have also cautioned that the amount Marketo is spending to acquire new customers could be a challenge. In his Customer Experience Matrix blog, industry analyst David Raab estimated Marketo’s “burn rate” last year was approximately $17 million. Based on the company’s customer count, Raab estimated Marketo’s revenue per client was $30,900 for 2011, versus total operating costs of $46,400 per client.
