We've been working towards raising a seed round of capital at Automattic and recently completed the final piece of it. Matt explains the thinking behind it here (and promptly celebrated the occasion with a new haircut). VCMike, one of our board members and investors, shares his thoughts here. And here's some background info:
Who are your investors?
Polaris Ventures (Mike Hirshland), Blacksmith Capital (Phil Black, now at True Ventures), Radar Partners (Doug Mackenzie), and CNET/Shelby Bonnie.
Why did you raise VC money?
Because we want to invest money into a rock solid infrastructure for wordpress.com and we want to have a buffer of money in the bank to be able to make long term decisions without having to worry about cutting it too close every month.
How did you go about it?
We looked at our revenues (we currently make money from Akismet, services and web hosting partnerships) to decide how much extra we needed to achieve the above goals. Then we went about finding investors who believe in blogging and open source and in our ability to create a great business. Thanks to our existing revenues we did not need a whole lot of investment dollars, which allowed us to raise money in a measured and incremental fashion that won't disrupt our business or raise the stakes to be sky-high. (BTW, most of this took place late last year before I joined Automattic).
Now that you have some cash in the bank will you be hiring lots of people?
Nope. We intend to stay frugal and grow the company organically as revenues grow.
Will this change anything for the WordPress.org open source community?
Only indirectly. Automattic does not own wordpress.org (it's owned by Matt who is creating a non-profit WordPress Foundation to ensure that WordPress will always remain open source). However, Automattic is a major contributor to WordPress with all of our developers working to constantly improve and support the software. Because this financing gives Automattic the financial stability to be around for a long time, we will be able to continue to contribute to the WordPress community for a long time.
15 responses so far ↓
GigaOM : » Automattic VC Cash // April 13, 2006 at 11:52 am
[...] Matt Mullenweg’s little company. Automattic, has raised a small round of funding. Matt explained on his blog why he raised the capital, but did not reveal the names of the investors. Today those details are coming out. The investors include Polaris Ventures, Blacksmith Capital and Doug Mackenzie from Radar Partners. Mike Hirshland from Polaris explains his motivations. Automattic CEO Toni Schneider gives his side of the story. [...]
451 CAOS Theory » Automattic/WordPress funding // April 13, 2006 at 12:10 pm
[...] UPDATE: Toni got in touch and has now in fact listed what details the company is prepared to release on his blog, appropriately enough. The money - the amount of which is something Automattic’s not disclosing - comes from CNet, Blacksmith Partners, Polaris Ventures and Radar Ventures. Blacksmith Partners also invested, although the partner that invested, Phil Black is now at Schneider’s True Ventures, [...]
TechCrunch » Automattic Takes Funding // April 13, 2006 at 12:14 pm
[...] Toni Schneider, the CEO of Automattic (WordPress.com, WordPress.org, etc.), gave more details on the funding that founder Matt Mullenweg wrote about yesterday on his blog. [...]
Brian Walsh // April 13, 2006 at 12:52 pm
Toni & team…
Congratulations! A cushion definitely helps when building out the infrastructure that is needed!!!
Funding for Wordpress founders at NevilleHobson.com // April 13, 2006 at 1:08 pm
[...] Automattic CEO Toni Schneider explains some of the why [...]
Dave Winer // April 13, 2006 at 2:11 pm
Toni, I’d love to participate in your next round.
Texas Venture Capital Web 2.0 Blog » Blog Archive » Polaris Announces Funding Automattic // April 13, 2006 at 2:37 pm
[...] Investors include of course Polaris (Mike Hirshland), Blacksmith Capital (Phil Black), Radar Partners (Doug Mackenzie), and CNET (Shelby Bonnie). Toni writes more here. [...]
Matt Mullenweg sells a stake in Automattic » mathewingram.com/work // April 13, 2006 at 5:33 pm
[...] VCMike, one of the guys at Polaris who acquired the stake in Matt’s company, has a description of why on his blog, and Automattic’s CEO talks about it here. [...]
These things are new or weird in my world at FactoryCity // April 13, 2006 at 7:14 pm
[...] Matt took funding. Just a little. [...]
» More on Automattic’s VC Influx The Blog Herald: more blog news more often // April 13, 2006 at 9:35 pm
[...] Automattic CEO Toni Schneider comments on his weblog: [...]
Technoogle » Blog Archive » Automattic Funded // April 14, 2006 at 9:23 am
[...] Automattic the company behind WordPress.com and Akismet, has recieved extra funding from polaris Ventures, Blacksmith Capital and others, the amount wasn’t announced. [...]
Dorai’s LearnLog » Love Wordpress // April 15, 2006 at 11:16 am
[...] I was doing something with Pages yesterday and noticed a bug. I sent it a report and within 12 hours I got an email saying the bug is fixed and asked me to try the feature again. This is simply awesome. So when I read that they got funding, I am happy for them. It is a great relief to know that they will stay frugal and responsive. [...]
Automattic Valued Between $150-300M : Venture Chronicles // October 18, 2007 at 1:32 pm
[...] less headline grabbing than the fact that they did all that with $1.1m in financing. Here’s Toni’s post on the financing they did last [...]
WordPress community hating on Microsoft - Rob Howard's Blog // January 4, 2008 at 9:49 am
[...] Edition is free (as in $0). The Commercial Edition is $99 to buy now and will eventually be more. Guess what? WordPress costs money too. If you think WordPress is 100% free then I would suggest enrolling in your local community college [...]
WordPress community hating on Microsoft - Rob Howard // January 4, 2008 at 10:10 am
[...] Edition is free (as in $0). The Commercial Edition is $99 to buy now and will eventually be more. Guess what? WordPress costs money too. If you think WordPress is 100% free then I would suggest enrolling in your local community college [...]
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