Crossbeam CEO Bob Moore couldn't have dreamed of landing a meeting with Andreessen Horowitz when he was raising capital for his first startup back in 2011. Now, after securing $76 million in a Series C led by the Silicon Valley venture capital firm, Moore said it's in part a result of the changing perception of Philadelphia's technology scene.
“That's not us bragging about Crossbeam being great. That's the market,” he said. “And that's the validity of what can be done in Philadelphia. And it's also a function of how much founders are at the center of the fundraising universe right now.”
Crossbeam's Series C was more than three times the size of the $25 million Series B that the startup raised last year. Besides Andreessen Horowitz, the company's latest funding round included Redpoint Ventures, FirstMark Capital, First Round Capital and Uncork Capital.
In 2011, much of Moore's time was spent fielding “gotcha” questions from investors about whether his previous startup, RJ Metrics, could recruit talent and get employees to relocate from tech hubs like New York and San Francisco. Now, the success of local startups like Guru, DuckDuckGo, dbt Labs and Gopuff is paving a path for other Philadelphia ventures to grow, Moore said.
Those companies have raised massive amounts of capital as a result of tremendous customer growth in recent years, and the venture capital market has been ripe. Philadelphia-area startups raised $1.8 billion across 91 deals in the third quarter — with $1 billion going to Gopuff alone — to bring the total amount of capital raised in the region this year to $5.2 billion, according to the latest Pitchbook-NVCA Venture Monitor report.
“There's this very, very substantial and exciting list of companies at all stages that are making it work in Philly, and they’re doing better than making it work,” Moore said. “They're building market-leading companies and category-defining companies in their space, and they're doing it with headquarters right here in Philly.
“And because of that, we get to stand on the shoulders of giants,” he said.
Moore doesn’t see the current uptick in funding for startups as being like the dot-com bubble. While there's less friction when it comes to fundraising, the companies that are securing waves of capital — particularly those in the software space — have real customer growth and revenue growth, Moore said. There’s a ton of money in the system that is pushing valuations very high, which could later lead to valuation compression, but it’s unlikely that those startups’ valuations would fall to zero like they did in the late 1990s, he added.
Crossbeam didn’t necessarily need the cash when raising its Series C, Moore said, but he felt that Crossbeam could be built into a better company faster if it had more capital.
And Crossbeam wasn’t alone in raising money solely to capitalize on fast growth. ForMotiv, a behavioral analysis startup, raised $6 million earlier this fall after reporting 400% growth in 2021 and 300% growth in 2020. ForMotiv was profitable before it raised the capital.
Moore doesn’t have any plans for a Series D yet, and the latest round of capital sets the company up for a long time. He declined to share Crossbeam’s valuation, but he said it was a “pretty substantial step up” due to the size of the Series C. The company was last valued at $120 million after its Series B last year, according to data from PitchBook.
“If we do raise more money in the future, I don't think it's going to be because we have to. It's going to be because we've made so much more progress that we can see an even more exciting, even more distant future that we want to pursue, and that's going to be the trigger,” Moore said.
