Over the past eight days, HubSpot has gained a new title: startup investor.
On Tuesday, the publicly traded Cambridge company announced it has made its second startup investment with the backing of a $15 million Series B round for San Francisco-based PandaDoc, which provides digital transaction software. That comes after the company revealed its first startup investment, Terminus, on May 15. (Update: On Tuesday, August 22, HubSpot announced its third startup investment, Sigstr.)
So why is the marketing automation company getting into the startup investment game now?
"The foundation of it was this idea of HubSpot trying to move from being a software company to a platform company," Brad Coffey, the company's chief strategy officer, told me in a recent phone interview.
Coffey said the company's transformation into a platform company began when it launched its HubSpot Connect program in 2015, which allows companies to bring customer data from different apps together into one system, which includes HubSpot's marketing and sales software, as well as its free customer relationship management software. The company now has 60 integration partners, including Zendesk for customer service, Eventbrite for event management and PandaDoc.
HubSpot originally began its relationship with PandaDoc as a integration partner, Coffey said, which allows HubSpot customers to do things like sign for transactions right within its CRM software. Eventually, Coffey added, as the company was looking for more ways to support and grow its partner ecosystem, an opportunity opened up for HubSpot to make an investment. Other investors in PandaDoc's new round include Microsoft Ventures and Rembrandt Ventures.
"The investment is a more meaningful step to working closer with these folks," Coffey said.
HubSpot's stock price is currently $70.35 per share, giving the company a $2.62 billion market cap. The company's shares have been at an all-time for the past few months after repeatedly beating Wall Street's expectations in its quarterly earnings. Most recently, for Q1, the company reported a positive net earnings for the first time, with a net income of $1.2 million, or 3 cents per share, on an adjusted basis. The company's Q1 revenue was $82.3, up 40 percent year-over-year.
Brian Halligan, CEO and co-founder of HubSpot, has described the company's move into "platform" territory on earnings calls as the "One HubSpot" initiative, which involves bringing all of the company's software into one interface.
"I'll say the greatest days are firmly in front of us because One HubSpot is all about achieving one shared goal with our customers, partners and investors alike, growth," he said on the company's Q1 earnings call. "We're on our way."
