Investors put $165 mln into Hootsuite; existing investors get part
SAN FRANCISCO Aug 1 (Reuters) - Social-media management company Hootsuite said investors have put $165 million into the company, with an undisclosed portion going to cash out existing investors.
Hootsuite is part of a growing group of venture-backed firms that have arranged financings known as secondary transactions, which cash out existing investors rather than putting money directly into the company's coffers.
In May, online-loans company Lending Club said a $125 million investment from Foundation Capital and others would go directly to its backers. In January, Tiger Global Management led a $444 million equity investment in online survey company SurveyMonkey as part of a financing round that also allowed early investors and employees to cash out.
Vancouver, Canada-based Hootsuite has done it before, too. In May 2012, OMERS Ventures, part of the Ontario Municipal Retirement System, bought a $20 million stake in Hootsuite through a secondary transaction.
Hootsuite's business model involves taking on services offered by more established businesses such as Salesforce , chief executive Ryan Holmes said in an interview.
"This gives us a good war chest to be able to compete effectively with them on the social front," he said about the portion of the funding the company will keep.
Insight Venture Partners led the financing round, with participation from Accel Partners and OMERS. Jeff Lieberman, a managing director at Insight, and Ryan Sweeney, a managing partner at Accel, will join Hootsuite's board.
Holmes declined to give a valuation for the latest funding round, saying only it had gone "significantly north" from May 2012, when Hootsuite was valued at around $200 million.