Sister companies Adpearance and Foureyes, which specialize in digital marketing and sales intelligence, respectively, raised their first round of outside capital as the fast-growing companies look to push product roadmaps.
The companies raised $10 million from a family office out of Florida. The round allows Adpearance and Foureyes more flexibility around product development, said co-founder and CEO David Steinberg. It also bolsters the balance sheet to prepare the companies for any other unforeseen economic shocks like the one delivered by the Covid-19 pandemic.
The companies weathered the pandemic, said Steinberg and in fact came out strong. A Paycheck Protection Program loan was instrumental early on, he said, and allowed the pair to avoid any layoffs as the economy went into uncharted waters.
Adpearance was started in 2008 and works with clients on digital marketing. It has 91 employees. Co-founders Steinberg and Aaron James then started Foureyes in 2016 after they saw clients looking to Adpearance to supply data and sales intelligence that could improve sales outcomes.
“It’s why we invested so much of our early profits to build Foureyes,” said James in a written statement.
The Foureyes business has grown to 106 employees. Both companies are hiring with an array of roles listed on their websites. The two companies have more than 1,700 customers in automotive, powersports and heavy equipment.
Steinberg wasn’t looking for investment. In fact, he has been reluctant to take on an equity investor because terms he has seen usually don’t pencil out in ways he wants to grow the business or in ways that will benefit the companies’ employees as well.
In 2013, Adpearance created an Employee Participation Plan that allocates 20% of any outcome that applies to founders stock to employees. The move was designed to ensure employees at the company can share in wealth generation created by their work.
“We found a family office that really believed in what we did with the Employee Participation Plan and were willing to fund it themselves,” Steinberg said, noting that the deal was non-dilutive for employees.
He noted that ensuring employee wealth creation in any transaction was important to him and is something he sees as a responsibility of business leaders today.
After the initial shock of the pandemic last year, Adpearance and Foureyes significantly changed the go-to-market strategy. Instead of trying to sell software to clients in March and April, the companies opted to give the software away and build goodwill with free trials.
The idea was to build a warm pipeline for when the market comes back, Steinberg said. More than 2,000 clients signed up. Now, they are working on converting those customers and so far have a 50% conversion rate.
“That success story allowed us to raise at the valuation we got,” he said.
The two companies are growing at about 83% year-over-year.
