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HubSpot Ventures to strategically fund friendly startups

HubSpot remembers the financial backing it received as a new company and creates its own $30 million venture fund to invest in startups that align with the HubSpot mission.

Following in the footsteps of its larger rivals such as Salesforce, HubSpot launched a venture capital group to back startups creating innovative tools plugging into the HubSpot platform.

The marketing automation software vendor produced more than $131 million in revenue in its most recent financial quarter, and now plans to serve as a source of capital to contemporary startups. It has started a $30 million venture fund -- HubSpot Ventures -- to support SaaS-focused startups that create tools for the HubSpot platform.

HubSpot leaders haven't forgotten the confidence other companies showed them when they sought financial backing throughout the last decade. In 2011, for instance, HubSpot received $32 million in capital from Google Ventures, Salesforce and Sequoia Capital.

The time has come to return the favor, said Andrew Lindsay, HubSpot's vice president of corporate and business development.

"It's an opportunity for us to help promote companies already doing well on our platform, as well as those that want to be doing well on the platform," Lindsay said.

The fund heralds a new chapter for the company. Lindsay said it comes as HubSpot transitions from providing marketing apps to small and midsize companies to offering companies of all sizes a suite of platform services. The venture fund helps startups chase their dreams while HubSpot users benefit from those companies' new and improved offerings in the HubSpot ecosystem.

Lorem, Blissfully inaugural beneficiaries

HubSpot will invest mostly in companies that participate in Series A or Series B funding and are creating a SaaS product. Before officially announcing HubSpot Ventures in December, the company invested in the website design and maintenance startup Lorem, and the SaaS management startup Blissfully.

It's an opportunity for us to help promote companies already doing well on our platform, as well as those that want to be doing well on the platform.
Andrew Lindsayvice president of corporate and business development, HubSpot

The venture fund will support companies dedicated to building long-term customer relationships, as opposed to those chasing quarterly fiscal numbers, Lindsay said.

"There is a lot of pressure to achieve near-term results and deliver immediate growth and revenue, but that's often done at the expense of long-term growth with customers," he said.

HubSpot will expect the startups to commit to the company's customer code, which stresses relationship building and "doing the right thing ... even when it's not the easiest path."

Aside from money, startups may also seek advice from HubSpot leaders.

"We will be available whenever they seek us," Lindsay said. "They can take our advice or not."

HubSpot-friendly tools targeted

Selecting startups that fit the HubSpot mold makes sense, said Denis Pombriant, managing principal of Beagle Research Group.

"It should be that way," he said. "Emerging companies ought to realize that it's becoming important to be an ecosystem player, to use and take advantage of bigger companies' platforms. This helps get that done."

HubSpot Ventures follows the company's history of "stirring things up to keep their approach fresh," Pombriant said, citing how HubSpot employees change their desks each quarter to ensure new and established employees mix and continue exchanging ideas.

HubSpot had another bit of news in December: It is furthering its relationship with Amazon Web Services (AWS). AWS Activate members already had access to HubSpot for Startups, a program that includes reduced pricing on software, as well as mentoring. Now, AWS will provide AWS Activate memberships and credits to participants of HubSpot for Startups.

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