The Story Behind Our $27.5M Series A Funding
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Last Thursday, TechCrunch broke the story about our $27.5M Series A funding led by Insight Venture Partners. Shortly thereafter, articles about the investment round appeared in AllThingsD, VentureBeat, and several other sites.
As the one who led the investment process for Pluralsight, I want to share some of the thinking that led to this outcome. I hope this post will provide more context for our customers and explain how the investment will impact the future of our business.
When we first considered the idea of taking an outside investment, we weren't sure it was the right thing to do. Pluralsight was founded back in 2004 and we've been profitable for over 8 years now. We pivoted to the online model in 2008, and since then, we've seen dramatic growth in overall revenue and our customer base.
We attribute most of this success to our simple strategy of delivering more value per dollar month after month as we continue to grow our online training library.
As a profitable, completely bootstrapped company, it's easy to convince yourself that "outside money" could be the start of your demise. After all, we've all heard horror stories about investments gone bad. Those stories cause many founders to worry about the unpredictable outside influences that often come attached to the money. This is especially worrisome when founders believe those outside influences could negatively impact the culture they've worked so hard to create over the years.
We certainly found ourselves in that camp. In fact, if you had asked us a few months back about the possibility of an outside investment, we would have said "no way".
So what changed?
As our brand began to receive more attention from the press, quite a few investment firms began to reach out to us. Although contrary to our initial instincts, we decided to keep an open mind. Then we began educating ourselves by researching the various possibilities and their pros and cons. Shortly thereafter, it became a very competitive process, and before we knew it, we had a long line of firms interested in our business.
We had countless conversations with investment firms all over the country to understand what they could offer us, both in terms of intellectual and liquid capital. We began to notice differences in their business models, cultures, experience, and most importantly, individual personalities. We began to realize that a few firms had much more to offer us than just a blank check.
It was at this point that our perceptions (as founders) began to shift.
We started to see that the "right" investment could really impact our business in a positive way. For starters, it would immediately remove the growth constraints imposed by the realities of cash flow and profits. We also started to appreciate the benefits of acquiring a new partner, and a few very sharp board members, who could help fill in some missing pieces as we continue to grow. It also became obvious that our customers would benefit more than anyone. A stronger balance sheet would make it possible to invest heavily in growing and expanding our library and delivering even more value in the near future.
We truly want to deliver more value to our customers, and believe timing is critical. Ultimately, we concluded that "doing nothing" presented a greater risk to our business than "doing something".
So after an intense period of self-education, pitching to firms around the country, and negotiating term sheets, we decided to go for it.
We chose to partner with Insight Venture Partners out of New York. We've been very impressed with Insight and especially Ryan Hinkle, the IVP partner leading their investment in Pluralsight. Ryan impressed us early on by demonstrating a solid, almost inherent, understanding of what's important in our business model. We believe Insight will help us build and grow in a way that's consistent with our vision and culture. I personally believe we will go further with them than without them, and that's why we're doing it.
The founding partners do remain in control of the company with majority interest and will continue in their respective management roles.
Ultimately, the Insight investment is a major win for Pluralsight and it's customers. I couldn't be more excited about what the future holds and what we already have in the works. As time rolls on, my promise to our our customers is simple: you will notice a positive difference in what you are paying for each month. Given that, it's a great time to let us know what's important to you. Drop a comment below and tell us what course topics you'd most like to see, and what features we should add to our learning experience!
Thank you for the continual loyalty and support, and for helping us create such a wonderful online community for software developers. Here's to an amazing 2013!