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.