Seattle-based SEOmoz is announcing an $18 million Series B round of financing today, led by Brad Feld’s Foundry Group, and also including Ignition Partners. This is the third attempt at raising a Series B by SEOmoz, the SEO and social media monitoring platform founded by the mother and son team of Gillian Meussig and Rand Fishkin. Fishkin told BetaKit in an interview that the time had come for SEOmoz to jumpstart its growth with outside investment, but getting there after two cases of financial heartbreak wasn’t easy for him.
“It’s like meeting the girl of your dreams,” Fishkin said about finally getting it right with this round led by Feld. “You suddenly see why all those other dates went so badly.” Both previous times Fishkin and his team attempted to raise funding, once in 2010 and again in 2011, and both times Fishkin was incredibly forthcoming about the circumstances that led to both deals falling through. This time around, however, he sounded very confident they’d found the right partners and made the right moves, despite a reluctance on his part to even attempt going through the process again.
“We’ve been profitable since 2008, but we’ve been basically reinvesting most of that money back into the business to grow,” Fishkin told us. “This is one of the first years where we looked around the business and said ‘Boy, we’re not going to be able to hit 2X growth with the capital that we’ve got.’ It was a good time to go out for capital, and certainly an intentional move […] but I was not happy about it. I knew it was the right thing to do, and I knew we needed to do it, but I’ve been burned too many times and just didn’t want to go out on anymore blind dates.”
As for why the time is finally right for this injection of capital, Fishkin said that SEOmoz is planning some significant changes to its core software products coming up sometime later this year, but it also hopes to add staff to fill its current Seattle office, and possibly look at expanding to a larger space.
“We’re particularly excited about some of the technical pieces we’re going to be able to work on,” he said. “We’ve had to build the backend of Google (the web crawl, the index, the link craft) on relatively small amounts of revenue – maybe 1/1000th of what Google can spend on it. This isn’t going to put us even at 1/100th, but it’ll put us on a little more even ground, so we can grow that index, and make some big hardware and infrastructure investments.” Another possible use is acquisitions, an area which Fishkin said SEOmoz is already looking at.
For a company that basically stumbled backwards into its business, starting as a small SEO consulting venture and evolving organically into a software platform and API business based on what customers were asking for, SEOmoz is doing very well. Its revenue doubled between 2010 and 2011, going from $5.7 million to $11.4 in that time frame, and the company predicts it will jump again to between $18 and $20 million in 2012.
Fishkin has a very optimistic view of the competitive landscape. He says small companies like gShift Labs, Raven, and Ginzametrics are direct competitors, but he also thinks there’s room for each to grow, and he notes that all of the above companies often enjoy more of a co-conspiratorial than a directly competitive relationship. As for larger companies like BrightEdge, Conductor, and Rank Above, Fishkin said that either SEOmoz actually powers their tools via its API, or they’re simply targeting a size of enterprise customer that SEOmoz just isn’t equipped to support anyway.
It isn’t all blue skies, however; there’s still a prevailing perception that SEO services are a waste of money, to put it charitably. Fishkin says that’s the real challenge; convincing potential customers that what it offers has real value, and that SEOmoz can provide them with something they can’t achieve on their own. Thanks to Feld’s financial backing and the endorsement that represents, that should get a lot easier for the Seattle startup.