Take notice, HubSpot. A new Boston startup wants to eat your enterprise-level lunch and do so with marketing automation tools that are based on open source software.
Mautic announced Tuesday it has raised a $5 million Series A round led by G20 Ventures and Underscore.VC, the new Boston venture capital firm founded by former North Bridge partner Michael Skok, former New England Venture Capital Association President C.A. Webb and former Demandware CEO John Pearce. After leading Mautic's $600,000 seed round earlier this year, the two firms sought to increase their investment because of the startup's early traction so far, which includes over 50,000 downloads of its free, open source software, the startup said.
The marketing automation startup also announced it has hired Matt Johnston, chief marketing and strategy officer at Framingham-based Applause, to become its CEO at the end of 2016. Johnston already joined its board in early July, and he told BostInno he's staying with Applause for the rest of the year to wrap up his duties there. Johnston will be based out of Mautic's Boston headquarters while David Hurley, Mautic's founder and CTO, will work from the startup's Raleigh, N.C., office.
"When we think about real opportunity in the marketing automation space, we're all thinking about the upper end of that market."
Mautic, which started out as an open source project by Hurley two years ago, plans to use the funds to hire 10 more people, with its Boston office focusing on sales, support and customer service and Raleigh focusing on engineering, Johnston said. The startup currently employs 14 people right now, with half in Raleigh, four in Boston and the rest working in remote locations.
Johnston said Mautic aims to sell the paid version of its marketing automation software, Mautic Cloud 2.0, to mid-level companies and higher, which typically means firms that have 250 employees or more. He said that contrasts with how marketing automation companies like HubSpot and MailChimp focus more on small- to medium-sized businesses, even through they each have own offerings for enterprise. What differentiates Mautic as an marketing automation tool for enterprises from what HubSpot and Mailchimp provide, Johnston said, is that Mautic focuses on catering to the enterprise at large as opposed to just focusing on a company's marketing department.
"When we think about real opportunity in the marketing automation space, we're all thinking about the upper end of that market," Johnston said. "... If I look at the lower end of the market, I think HubSpot and MailChimp do a very good job."
As for why Johnston thinks open source is a better solution than proprietary software, it comes down to how the Mautic open source project, which is free for anyone to use, has thousands of contributors across the world adding new features — this year alone has seen dozens — that can later be added to the paid Mautic product. That gives Mautic two key advantages, Johnston said: "it forces you to think about things in an open and modular way," and it enables Mautic to add features at a faster pace than other companies.
"We’ve invested in and seen the disruptive power of open source projects first hand."
Johnston said there's "a lot of crossover with community members and customers," and that contributors, who are not paid for their work, include software engineers who are looking to work to on an open source project and marketing practitioners, including those at agencies, who are looking for new ways to improve their own marketing automation processes. For Johnston, whose experience at Applause includes overseeing its community of quality assurance testers, investing in Mautic's community is an important aspect of the startup.
"It becomes an important part of the DNA of Mautic as we build a more commercial company," Johnston said. "You can't lose sight of how important that idea is."
While contributors may not be paid for their work, which is the norm for open source projects, Johnston said there are opportunities for developers to build their own practice so that they can get paid by customers for their expertise with certain features or integrations.
For Skok, one of Underscore.VC's co-founders, this isn't his first open source investment. An earlier investment of his while he was at North Bridge was Boston-based Acquia, which has built a major business based on an open source content management system. And that's one of the reasons why Skok sees a lot of potential in Mautic.
“We’ve invested in and seen the disruptive power of open source projects first hand,” Skok said in a statement. “The combination of David and Matt, plus the size, growth potential, and stickiness of the marketing automation space, powered by a strong open source community, is a great recipe for success.”
