For a decade, Litmus was bootstrapped and proud of it. As Paul Farnell, co-founder and CEO of the Cambridge email testing specialist, told me in 2013, “We’ve always liked having complete control of our direction.”
“We’re not just trying to make this as big as it possibly can be in the shortest possible time, and then sell and be done. We’re trying to build something that’s sustainable,” Farnell said at the time. “We really value that freedom of being able to work on whatever we find to be interesting, and pursue new things without any friction.”
But as of today, Litmus has moved into a different phase. The company announced a $49 million funding round from Spectrum Equity to bring new products to market “quicker and on a much bigger scale,” Farnell told me today.
“We set this goal years ago that we wanted every marketing email that went out to have touched Litmus in some way,” said Farnell— perhaps run through Litmus' testing software or its checklist product, or tracked with the company’s analytics. “In order to realize that, we need to think a lot bigger as a company.”
While the stake in Litmus that Spectrum now owns isn’t being disclosed, Farnell indicated that Litmus will keep the control over its direction that the company has so prized over the years. “I think absolutely we’re looking for [Spectrum’s] guidance and partnership, but it’s very much us driving that and us driving the roadmap,” he said.
"We’re looking for (Spectrum’s) guidance and partnership, but it’s very much us driving that and us driving the roadmap."
Spectrum, Farnell said, is known for its interest in backing companies that’ve previously bootstrapped their way to profitability. Those have included Lynda.com, SurveyMonkey, Ancestry.com and PicMonkey, he said. “They have gone out of their way to find companies exactly like us,” Farnell said. “It felt like, the more and more we spent time with Spectrum, that it was a natural fit.”
Litmus, Farnell noted, has been getting outreach from investors on a regular basis “for six or seven years.”
“We’ve spoken to Spectrum in the past, and others, and it wasn’t the right time,” he said.
Along with boosting the investment on product, Litmus will be looking to expand geographically, particularly in Europe, Farnell said.
But the bootstrapping mentality will continue to influence the company’s approach. Litmus employs 40 right now and Farnell said he didn’t have an estimate on how many people will be added in the near term. “Certainly hiring is one thing we want to use part of this funding for over time. But we’re proud that we’ve grown the company and the team very organically, and we don’t want to change that. We want to keep being very careful—finding the perfect people, and having gradual growth of the team.”
Photo courtesy of Litmus.
