A downtown Raleigh startup says it hit unicorn status overnight.
Pendo.io, a software firm that began with a handful of employees at a coworking space, has raised a whopping $100-million funding round.
The company – now at 389 employees at a downtown Raleigh headquarters – is led by Rally Software veteran Todd Olson. Olson, no stranger to funding hauls, has helped reel in a total of $206 million in financing for the company, which offers a software platform aimed at helping firms deliver customer experiences in their products.
The latest raise values Pendo at $1 billion, according to the company.
And it’s all about growth, Olson says.
“In February of this year, we started our international expansion,” he says, adding that, in addition to overseas growth, the firm will “continue to invest really heavily in our product on the R&D side.”
And a third acquisition is a strong possibility.
“It just gives us the option to do more of that if we encounter companies that make sense,” Olson says.
Olson says he’s also thinking about the company’s future – and the thought of a possible public offering isn’t far from his mind. “We have to continue to build the business that is capable of going public,” he says. “I think a lot about IPO readiness, whether we end up doing that or not. As we get larger in scale, we have to make sure it’s a viable option for the business, so we’ll do that. As far as timing… we’re nowhere near close to being a public company.”
The latest round was led by Sapphire Ventures. New investors included General Atlantic and Tiger Global, as well as existing backers Battery Ventures, Meritech Capital, FirstMark and Geodesic Capital.
The company, which reported $20.9 million in 2018 revenue according to its Inc. 5000 profile, is already being heralded as a local success story.
Lister Delgado, one of the Pendo’s earliest investors through IDEA Fund Partners, calls the latest funder a “testament to their team.”
“Their past has been great, but in my opinion, their future is even brighter,” he says.
Pendo’s success also reflects on North Carolina, he adds.
“Pendo is a great role model for other companies to try to emulate,” he says. “That is a very important element in the maturity of an entrepreneurial ecosystem.”
Chris Heivly, the Durham-based serial entrepreneur turned vice president of innovation for entrepreneurial accelerator Techstars, agrees.
“Aspiration is a big part of the entrepreneurial journey,” he says, adding that success stories can also bolster the region’s reputation to out-of-state investors – thereby lifting up the next startup story. “Maybe other investors go, ‘Wow, if Raleigh-Durham can support a Pendo, maybe I should look at that area.’”
“Having such a visible success story helps further brand our region as ripe for startups to launch and grow,” adds Brooks Raiford, CEO of the North Carolina Technology Association.
Will Dunbar, an early investor in Pendo through D.C.-based Core Capital Partners, says Pendo “puts Raleigh and the Triangle in a terrific light.”
“We’ve financed a handful of companies in Raleigh and Durham… and we’d love to see [Pendo] attract more attention and more capital to the region,” he says.
But with big money often comes big challenges.
The challenges of running a billion dollar company versus a $100 million company are unique, Heivly explains.
“One of the challenges is, do we have enough experienced talent here for them to execute?” he says, pointing to Red Hat’s decision to pull in Jim Whitehurst from Delta Air Lines when it was scaling up. “At different stages of a company’s growth, you need different talent. That’s not just the CEO. It starts to filter down. This is both a challenge and a great opportunity. What it means is, we’re going to be attracting that talent.”
For his part, Olson says it’s something he constantly thinks about.
“We’re constantly evaluating our team, we’re constantly evaluating our processes,” he says.
And it’s adding senior talent to the headcount as it expands, he adds.
Last year, shortly after disclosing a $50 million funder, Pendo announced it planned to double down on Raleigh, adding 590 jobs in exchange for state incentives.
And Olson says its growth is on track – evidenced by its recent number 73 ranking on the 2019 Inc 5000 list.
But its success isn’t limited stateside. The company announced plans to triple its presence in the United Kingdom in August, a move bolstered by its acquisition of British firm Receptive Software Limited earlier this year.
A review of securities filings from 2019 shoes mammoth funders like Pendo’s are few and far between – particularly in Triangle technology companies. Aside from Pendo, AI-focused firm Pryon has closed the biggest Triangle tech funder of 2019 so far, which eventually totaled nearly $25 million, securities filings show.