While keeping a fairly low profile since graduating from Techstars Boston in 2011, Boston startup Help Scout has built a profitable business of providing Web-based help desks to thousands of paying customers—on just $800,000 in funding.
That’s a small sum for a tech startup these days; Help Scout co-founder/CEO Nick Francis calls himself a “bootstrapper at heart.” On Wednesday, though, Help Scout announced that it's ready to evolve—with a $6 million Series A round, led by prominent venture firm Foundry Group. “I may be more comfortable in a bootstrapped business, but when the business and market fundamentals point to a different path, it’s important to consider what’s best for the business,” Francis wrote in a Medium post Wednesday morning.
In an email to BostInno, he added: “Our path to VC has been different, as we're well beyond typical Series A traction. We also have no plan/obligation to raise money again.”
Here are the other key details to know on the news:
• Profitable business. Help Scout—whose mantra is to “deliver personalized customer support at scale” over the Web—has been profitable for the past 18 months, Francis said. The startup’s customer base of nearly 3,000 companies includes GrubHub, CrossFit, Buffer and AngelList, and spans 70 countries. Revenue in 2014 was “in the millions,” according to Francis.
• Why raise money now? Francis said the key is that the customer economics make huge sense for adding some capital right now. Help Scout is recouping its customer acquisition costs in less than three months. “For any SaaS business, that's a pretty clear sign that we can afford to invest more money in marketing and customer acquisition. For that reason, we're going to invest in several new channels and experiments,” Francis said in an email.
• Hiring ahead. The company employs 20, and expects to double that number in the next year. The team is highly distributed—with 75 percent working remotely, from four countries and 11 states.
• Board additions. With the investment from Foundry Group—a Colorado firm co-founded by well-known VC Brad Feld—Foundry managing director Ryan McIntyre will be joining the board at Help Scout. Foundry is a “a group of like-minded (but much smarter) people who totally understand our business and were eager to bet on our team,” Francis wrote in the post. “From the moment I met Ryan McIntyre for the first time, it only took eight days to sign a term sheet.”
• CommonAngels. The other investor in the Series A round is local firm CommonAngels Ventures, whose venture partner David McFarlane—COO at local bootstrap success story Litmus—will be joining the Help Scout board.
• Techstars Boston 2011 is now No. 1. It’s well known in the Boston tech community that an unusually large number of successful companies came out of this class, which have gone on to raise a good deal of funding altogether. Interestingly, with Help Scout’s new round, Techstars Boston 2011 has become the best-funded alumni class of the entire Techstars program, according to Techstars statistics, surpassing the NYC 2012 Summer class. For now, at least.
