PE Week
By Constance Loizos
March 8, 2010
Acquisition of CoTweet, a tweet management company, seen as good omen for other Twitter-related startups
Twitter may still be grappling with how to profit off its 75 million registered users.
But some startups in the ecosystem created by the microblogging phenom are starting to look like smart investments.
Just last week, Indianapolis-based ExactTarget announced that it had acquired CoTweet, a San Francisco-based company whose customer relationship management tools had recently attracted a growing stable of companies that pay it $1,500 a month for access to a dashboard that helps them manage various Twitter accounts, knowledge sharing with non-competing clients of CoTweet, and round-the-clock customer service.
CoTweet needed the muscle of 10-year-old ExactTarget, a powerful email marketing company that had yet to make a foray into social media and which courted the startup.
"The market is moving incredibly fast," said Jesse Engle, CEO and co-founder of CoTweet. "Over the span of a year, companies have wholeheartedly embraced social media, starting with Twitter. We saw massive demand and massive interest."
Though the terms of the acquisition were not disclosed, investors in both companies look to make out, too. ExactTarget CEO Scott Dorsey said the company, which shelved plans to go public amidst the turmoil of 2008, will "likely look for an IPO down the line."
That could mean big returns for investors, including Battery Ventures, Scale Venture Partners and Insight Venture Partners, which have invested $155 million in the company to date. If the acquisition involved stock, it could mean a tidy profit for The Founders Fund, First Round Capital, Baseline Ventures,Maples Investments, Freestyle Capital and angel investor Ron Conway, who have collectively invested $1.1 million in CoTweet.
Steve Anderson, founder of Baseline Ventures, calls "Twitter and real-time startups a significant part" of where he continues to invest right now.
It's no wonder.
CoTweet isn't the first Twitter-related company to receive seed funding and sell quickly. Baseline also scored a hit with Mixer Labs, which built a location engine for developers and a location information site called "TownMe." Late last year, Twitter acquired Mixer Labs for $5.2 million in stock.
The company had raised an undisclosed amount of seed funding from Baseline, Sequoia Capital, LinkedIn founder Reid Hoffman and Harrison Metal in 2008.
Investors also did well with Summize, which developed technology to run brief summaries about movies, films and music by crawling online discussions of them. The company raised $750,000 in 2007 from Betaworks and Passport Capital and sold to Twitter for a reported $15 million in stock in 2008.
Indeed, Twitter has money to spend. The four-year-old, San Francisco-base company has raised $163 million from a long line of angel investors and venture firms, including Conway, Chris Sacca, Benchmark Capital, Spark Capital and Institutional Venture Partners. During its most recent funding round last fall, Twitter was reportedly valued by investors at $1 billion.
Many industry observers familiar with StockTwits, a microblogging site for traders, also see a healthy exit as forthcoming for the company, possibly via an acquisition by a financial services behemoth. StockTwits, formed in January 2009, originally piggybacked off Twitter, gaining roughly 100,000 followers.
It later developed its own desktop application, quickly signing up 40,000 registered users, some of whom now circumvent Twitter altogether, sending out updates about what stocks they are following within StockTwits' platform alone.
StockTwits has raised $4.6 million from Foundry Group, True Ventures, Betaworks and numerous angel investors, including Roger Ehrenberg.
GigaOm
In another sign of how the lines between traditional digital marketing and social media are blurring, email marketer ExactTarget has acquired Twitter management tool CoTweet for an undisclosed sum. ExactTarget, based in Indianapolis, has tools that allow companies to target email marketing pitches and related "permission-based" web campaigns, and has a customer list that includes Expedia, Home Depot, Gannett Co. and Wellpoint Inc. Although it does some text messaging as part of its marketing services, it is not known for its work with social media. The CoTweet acquisition is clearly an attempt to change that. The deal even got the imprimatur of Twitter COO Dick Costolo, who said:
This acquisition is strong validation that valuable, sustainable businesses are emerging from the Twitter ecosystem. An ExactTarget and CoTweet combination should lead to even further digital marketing innovation through use of the Twitter platform.
CoTweet, founded in 2008, has become popular with companies such as McDonald's, Microsoft, Ford, Dell and Pepsi as a tool for managing multiple Twitter accounts from a single page. This makes it easy for marketing staff at those companies to handle the social media pitching and responses they do as part of their campaigns and customer service. CoTweet - which raised $1 million in seed capital in in July from a group including The Founders Fund, Ron Conway's SV Angel fund and First Round Capital, Maples Investments and Freestyle Capital - was one of the first Twitter-related businesses to recognize that the social network could be used as part of an integrated customer relations management service.
ExactTarget, which filed for an initial public offering in 2007 but never actually went public, raised $70 million in financing from a group including Battery Ventures and Scale Venture Partners in May of last year, and then just a few months later raised another $75 million from Technology Crossover Ventures. It has been using the funding to expand its business outside the United States, and said recently that it recorded its 36th consecutive quarter of growth in the fourth quarter of last year and had annual revenues of $95 million.
Embedded below is a video of ExactTarget CEO Scott Dorsey (no relation to Twitter co-founder Jack Dorsey, as far as we know) talking about the deal with CoTweet founder Jesse Engle.
Businesses Now Have Complete Solution to Manage Social Media, Email and Mobile Communications
SAN FRANCISCO (March 2, 2010) – Global on-demand email marketing and one-to-one marketing provider ExactTarget announced today it has acquired San Francisco-based CoTweet, creating the industry's first complete solution for managing communications across all interactive marketing channels including social media, email and mobile.
CoTweet will operate in San Francisco as a business unit of ExactTarget and will lead the company's social media product development. CoTweet co-founder and chief executive Jesse Engle will lead the San Francisco operation and spearhead the creation and expansion of the company's social media lab.
"What we're seeing in the market is organizations are moving quickly to try to capture the potential of social, but are discovering that it's siloed and not integrated effectively with other forms of digital communications," said Scott Dorsey, ExactTarget co-founder and chief executive officer. "By combining the power of ExactTarget and CoTweet, we can provide businesses a complete solution to tie together all forms of interactive communications and drive deeper customer engagement online."
Founded in 2008 and based in San Francisco, CoTweet is a Web-based collaboration platform that allows companies to manage multiple Twitter accounts from a single dashboard, support multiple editors, track conversations, assign roles and create follow-up tasks. The company has a growing client list, including Whole Foods, McDonald's, Microsoft, Ford, Dell, Pepsi, Sprint, Intuit, Salesforce.com, USA Today and Coca-Cola.
"We see a huge opportunity to build on ExactTarget's incredible business and customer relationships to help companies drive more measurable value from social media," said Engle. "As part of ExactTarget, we'll have the global resources to cement our early lead, rapidly expand our platform and develop the next generation of social media communication tools."
Forrester Research predicts social media marketing will grow faster than any other form of interactive marketing. In its 2009 U.S. Interactive Marketing Forecast Report, the independent research firm estimated social media marketing will grow at compound annual rate of 34 percent, reaching $3.1 billion by 2014.
"This acquisition is strong validation that valuable, sustainable businesses are emerging from the Twitter ecosystem," said Dick Costolo, Twitter's chief operating officer. "An ExactTarget and CoTweet combination should lead to even further digital marketing innovation through use of the Twitter platform."
The acquisition of CoTweet follows ExactTarget's record-breaking 2009 that welcomed the company's 36th consecutive quarter of growth in the fourth quarter 2009 and saw annual contracted revenue soar to $114 million and total GAAP revenue exceed $95 million. In 2009, ExactTarget also secured $145 million in venture capital investment, opened its first international office in London, earned the title of a "leader" in email marketing in the "The Forrester Wave: Email Marketing Service Providers Q4 2009" (December 2009) report and added NIKE Inc., Best Buy and Universal Music Group to its client list. Headquartered in Indianapolis, ExactTarget now employs more than 600 associates worldwide.
For additional information on the acquisition, visit www.ExactTarget.com/Connected.
About CoTweet, Inc.
CoTweet is the real-time business collaboration platform for Twitter. Working with companies such as Whole Foods, Starbucks, JetBlue, Ford, Pepsi, Sprint, Coca-Cola, the City of San Francisco/311 and Twitter, CoTweet has established itself as the tool of choice to brands to connect and engage with customers and stakeholders. Founded in 2008, CoTweet is based in San Francisco, Calif. For more information, visit www.CoTweet.com.
About ExactTarget
ExactTarget is a leading global provider of on-demand email marketing and one-to-one marketing solutions. The company's software as a service technology provides organizations a single platform to connect with customers via triggered and transactional email, integrated text messaging, voice messaging, landing pages and social media. Supported by collaborative global services teams, ExactTarget's technology integrates with more sales and marketing information systems than any other in the industry, including Salesforce.com, Microsoft Dynamics CRM, Omniture and Webtrends among many others. ExactTarget's software powers permission-based multi-channel communications for thousands of organizations around the world including Expedia.com, Aurora Fashions, Papa John's, CareerBuilder.com, Gannett Co., Inc., The Leukemia & Lymphoma Society, The Home Depot and Wellpoint, Inc. For more information, visit www.exacttarget.com or call 1-866-EMAILET.
The Deal
By Maria Woehr
ExactTarget Inc. has acquired CoTweet Inc., which allows companies to manage multiple Twitter accounts, for an undisclosed sum. CoTweet CEO Jesse Engle and Scott Dorsey, CEO of ExactTarget, spoke to The Deal Tuesday about the acquisition. Dorsey said the acquisition will add to the company's social media product development as it expands beyond e-mail marketing. This is ExactTarget's second acquisition. It acquired Keymail Marketing in September to expand into the U.K.
ExactTarget has been steadily growing since it raised $70 million in financing from Battery Ventures and Scale Venture Partners in May and $75 million from Technology Crossover Ventures. The funding came after the company filed for an initial public offering in 2007, but it decided to stay private. Dorsey added that more acquisitions were likely going forward.
Engle will play a key role in ExactTarget's integration of CoTweet by managing the social media product development. After he appeared on Behind the Money with The Deal's Mary Kathleen Flynn in February 2009, Engle raised $1 million in seed capital for CoTweet in July from the Founders Fund, Ron Conway's SV Angel fund and First Round Capital, Maples Investments and Freestyle Capital. Engle says he is looking forward to his new position. "We will be tripling the size of the team with a specific focus in engineering. We are going to expand our services beyond Twitter." Engle added that social media product development for LinkedIn and Facebook was in the works. Watch the video above or download it at iTunes.
TechCrunch
By Robin Wauters
Email marketing software giant ExactTarget has agreed to acquired CoTweet, a young company that offers a tool that enables multiple people to communicate on Twitter through corporate accounts.
CoTweet will continue to operate from San Francisco as a business unit of ExactTarget, essentially taking charge of the company’s social media product development. CoTweet co-founder and CEO Jesse Engle will lead the San Francisco operation and head ExactTarget’s new “social media lab”.
Terms of the agreement have not been disclosed, but we’re digging.
CoTweet was founded in 2008 and offers a browser-based collaboration platform that allows companies to manage multiple Twitter accounts from a single dashboard, support multiple editors, track conversations, assign roles and create follow-up tasks. Its high-profile customers include Whole Foods, McDonald’s, Microsoft, Ford, Dell and Pepsi, among others.
The company raised just over $1 million in seed capital from Ron Conway’s SV Angel fund, The Founders Fund, Baseline Ventures, First Round Capital, Maples Investments and Freestyle Capital.
Twitter COO Dick Costolo also managed to squeeze in a quote in the official press release, saying that he sees the acquisition as a “strong validation that valuable, sustainable businesses are emerging from the Twitter ecosystem”.
ExactTarget claims annual contracted revenue of around $114 million for 2009, a year in which it raised a staggering $145 million in venture capital. The company employs more than 600 people, recently opened an office in London and counts Nike, Best Buy and UMG among its clients. You can read the company’s letter to its customers here.
Mashable
CoTweet, the Twitter CRM tool used by several massive brands including JetBlue and Ford, has been acquired by ExactTarget, an email marketing firm.
In a statement, ExactTarget CEO Scott Dorsey said, "By combining the power of ExactTarget and CoTweet, we can provide businesses a complete solution to tie together all forms of interactive communications and drive deeper customer engagement online."
While perhaps not a widely known name in the social media space, ExactTarget is a major player in email marketing, generating $114 million in revenue for 2009. The company has also raised a massive $140 in venture capital, most recently securing $75 million this past December.
Meanwhile, CoTweet has made waves as one of the first enterprise players in the Twitter space. After starting out as a free beta, the company began charging $1500/mo for its tools late last year. Now, the company will join forces with a much larger outfit that can push its software to an existing base of customers.
And that might've been CoTweet's best option. While they were early to the enterprise Twitter space, they've since attracted some large competition. For example, Salesforce.com, already a behemoth in the CRM space, now offers its own Twitter CRM features.
Certainly, the move can be seen as further validation of the role of marketing in social media. Twitter's COO Dick Costolo said as much in the company's announcement, declaring that, "this acquisition is strong validation that valuable, sustainable businesses are emerging from the Twitter ecosystem."