Automattic funding

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 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 open source community?
Only indirectly. Automattic does not own (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.

17 replies on “Automattic funding”

Toni & team…

Congratulations! A cushion definitely helps when building out the infrastructure that is needed!!!

[…] 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. […]

[…] 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, […]

[…] 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.  […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s