Despite headlines warning of falling valuations and a sea change in the venture capital sector, San Francisco is still managing to mint more unicorns.
CaptivateIQ, a company that makes software for companies looking to administer and analyze commission payments to their sales teams, recently raised $100 million in a Series C round, bringing its valuation to $1.25 billion. The round was led by big hitters in the VC world such as Sequoia Capital and brings the company's total funding to $164.6 million, according to Pitchbook.
“I’ve been a part of now three or four cycles, going back to the tech bust back in 2001. I was at Lehman Brothers during 2008, and the one at the start of Covid and the one we are dealing with now,” said CaptivateIQ CEO and cofounder Mark Schopmeyer. “The markets cycle, but we’re not operating for the short term, we’re operating for the long term. Ideally we want to be a $10-20 billion company one day.”
He says the company has managed to triple its annual recurring revenue each year for the past 2 years and has grown its workforce to 250 people. The influx of cash will likely be used for acquisitions, further personnel growth and international expansion.
The idea for the company came from Schopmeyer's own experience working in the finance industry and personally hating having to deal with the part of his job related to handling sales commissions for a complicated array of deals, contracts and pay structures. "I almost left the industry because of it," he said.
That frustration was apparently shared by many companies with large enough sales teams that the tried and true method of using spreadsheets wasn't enough. Its clients now include a number of high growth tech firms such as Gong.io, Affirm and Amplitude. CaptivateIQ has developed its product for companies of 1,000 to 5,000 people, but plans to scale the utility of its product upwards to 15,000-person companies. While its focus is in tech, its customer base is expanding into other sectors like manufacturing, health care and financial services.
"People think commissions are simple," Schopmeyer said. "It's so much more complicated than in that companies all have different commission plans and different data structures and they are changing it all the time. It's a very, very hard problem to solve."
The company has no plans for an IPO, especially in the uncertain market climate, but Schopmeyer is optimistic on the overall health of the startup sector and its ability to weather the current storm.
"I don't think companies have had this growth-at-all-costs mentality, and companies have been disciplined, they have been trying to figure about growing with a focus around unit economics," he said. "What you are seeing is the risk curve on how far you go is getting pulled back a little more and companies can't extend their burn rate as much and will focus on getting to profitability even sooner. I think a lot of companies will be able to make that adjustment."
