Editor's Note: For complete information about HubSpot's Series D funding round, please check out the official press release .
Here is an insider’s take on the round of financing we just closed with Salesforce.com, Google, and Sequoia.
Why Raise More Money?
Before this round of financing, we had already raised three previous rounds, totaling $33 million of investment. That is a large amount of capital, and you can easily build a sustainable company with it. But, we want more than that, and there were three big reasons as to why we decided to raise another round.Three Reasons HubSpot Raised Another Funding Round
1. Only One Winner in Most Markets - In industries formed prior to the internet, oligopolies naturally formed where there is a market leader holding 20% marketshare, a 2nd place competitor having 18% or so, a 3rd having 15%, etc. In industries that have formed in the last 10 or so years, the opposite seems to be happening where the winner takes all (or at least 80% of the market cap in that given industry). A few examples include Amazon, VMWare, Zappos, Salesforce.com, Google, and even Groupon. We don’t feel like we are in their league yet, but we feel like we are out front in an important new industry and want to hit the gas and try to get into their league. It’s a go big or go home world we live in.2. The Perfect Investors - We are thrilled with our three new investors. Dharmesh and I have been studying Salesforce.com since we were in school together 6 years ago at MIT when HubSpot was just a twinkle in our eyes. We so admire Salesforce.com, that when we moved into our new office last year, we named one of our conference rooms “Benioff” after its founder. The same goes for Google – we consume as much information as we can about the way Google builds products, innovates around culture, etc. and we often emulate them. Like Benioff, we have a conference room named “Brin” and another one named “Page.” Sequoia is the top dog in the venture world and although we don’t have a conference room named for anyone over there, we’ve admired them from afar for a long time. I’m humbled to have these three firms, whom we so respect, take an ownership stake in HubSpot. Our existing investors, General Catalyst, Matrix, and Scale have been awesome. In order to make this round work, our existing investors had to be very flexible and go way out of their way to make this happen – a heartfelt thanks. In particular, thanks goes out to Larry Bohn (GC) and David Skok (Matrix) – these guys made early bets on us and have been immensely helpful every step of the way. There’s A LOT more hard work ahead of us and I’m sure glad these guys are on our team.
3. Funding Our Ambitious Vision - So, what are we going to do with all that cash? Well, we are not going to sit on it – we are going to invest it. As opposed to most late stage venture rounds where most of it is spent on sales and marketing, our plan is to invest much of it in R&D (and maybe some technology acquisitions) to further delight our customers and count on them to spread the word. We feel like this is the right approach in today’s transparent world. On the application side, we will make it faster, richer, and better. We will also open the entire product up into a platform by providing a clean, simple API. HubSpot is basically one big mash-up application that pulls information in from your website, Google, Twitter, Facebook, LinkedIn, your CRM system, etc. We want to allow other companies to integrate into HubSpot and extend it in new, useful ways.
How Did We Get Here?
We have made plenty of mistakes since starting the company, but we did a few things right from the start which made all the difference. 
1. Marketing Transformation - HubSpot was built around two simple observations. First, that the traditional marketing playbook (cold calls, ads, etc) is broken as buyers are getting better and better at blocking these tactics out (spam protection, Caller ID, DVRs, etc). Second, that buyers have radically changed the way they shop, learn, work, and live – spending more and more time in search engines, blogs, and social media sites. Our vision from day one, has been to help companies transform the way they market to match the way humans actually shop, learn, and buy. Instead of interrupting them with emails, cold calls, ads, and other forms of outbound marketing, we help our customers pull them in from search engines, blogs, and social media sites and other forms of inbound marketing. We haven’t done everything right at HubSpot, but it feels like we got these founding principles right.
2. Easy and Integrated - We were inspired by the iPod & iTunes when we started the company. When the iPod came out, there were lots of other MP3 players on the market. Instead of making a better MP3 player, Apple focused on making the process of downloading and carrying music around much easier by integrating a simpler MP3 player (iPod), an application (iTunes), and the music itself. We took the same approach, rather than cobbling together an inbound marketing solution (blogging tools, SEO consultants, social media monitoring software, marketing automation tools, analytics, etc.), we built a system from the ground up that was focused on simplicity, so that mere mortals could make the transformation from old/outbound to new/inbound.
3. Eat our own dog-food - From day 1, we ate our own dog-food. Since the early days of HubSpot, we have lived in our own software. Initially, it was just me giving product feedback to Dharmesh, but now we have a largish marketing organization using it every day giving feedback to a largish R&D organization. We have also embraced the inbound marketing philosophy in the way we do marketing and that has paid off in spades – last month alone, we generated over 30,000 inbound leads.
If you have any questions about the round or any of our thinking, please feel free to leave a comment below and I’ll respond.
Inbound Marketing Blog Feed
Darian Germain 4:34 PM on March 08, 2011
Congrats, folks - we've been impressed with inbound marketing from the start - can't wait to see what's next!
Darian
Jane 4:38 PM on March 08, 2011
Congratulations! Looking forward to the continuing evolution of Hubspot.
doug hay 4:42 PM on March 08, 2011
Well done - love your webinars and charts. Hope one day you will have a product for smaller budgets.
Jenny Floren 4:47 PM on March 08, 2011
Brian, Dharmesh & Team Hubspot -
Congratulations! And congrats also to your new investors for making such a smart bet. You guys are leading the way, and helping companies like ours be more successful every day. Thank you!
Jenny Floren
CEO
Experience, Inc.
www.experience.com
Matt Howard 4:48 PM on March 08, 2011
Bravo! As a satisfied Hubspot customer, i can say that you and Dharmesh have built a fantastic product. As a student of start-ups and innovative marketing practices, i can say that you and Dharmesh have taught me, and the rest of the world, some amazing lessons. Keep it up!
Marcus Sheridan 4:51 PM on March 08, 2011
Freaking awesome Brian. I'm pumped.
Craig 4:53 PM on March 08, 2011
This is great news, I can only look forward to where Hubspot is heading and the developments and refinements we will see. My only issue is what happens when Hubspot is too popular and your customers competitors start using it. Can I suggest you always have a cutting edge offering for your early adopters to stay one step ahead.
Zorian Rotenberg 5:04 PM on March 08, 2011
Congratulations Brian, Dharmesh & the HubSpot team!
Having any one of Google, Salesforce or Sequoia in your corner is a significant and extraordinary milestone. But getting all three is just something else!
Looking forward to seeing more great things from you!
Andy Cook 5:06 PM on March 08, 2011
Congrats Dharmesh & Brian! That's huge. And I'm really pumped you guys are rocking it from Boston too!
Jeremiah Aja 5:17 PM on March 08, 2011
CONGRATS to an already great team with a great product!
Kevin Burke 5:22 PM on March 08, 2011
Nice company to be in.
Heike H 5:24 PM on March 08, 2011
Congratulations! I have been a customer and fan for almost two years and am happy to report that what you teach does work. With the information HubSpot provides it is easy for a non-techie to learn the ropes of inbound marketing.
I'm looking forward to the results of all those R&D investments.Keep up the good work.
Chris Barry 5:28 PM on March 08, 2011
We're preparing to launch, and once we do, we've already decided that we're becoming a HubSpot customer. Reading this gave me the feeling that we have made the right choice! Congratulations!
Todd McDonagh 5:40 PM on March 08, 2011
Keep up the excellent work. Looking forward to seeing new features and introducing product to more clients.
Richard Ault 5:41 PM on March 08, 2011
Congrats on your funding. That is a serious war chest indeed. Btw, how do you all see the hub bub over the diff between white and black hats?
Apartments 5:41 PM on March 08, 2011
Congrats and well done. I think you guys at Hub Spot have a great philosophy there by eating your own dog food. I look forward to the great things to come.
Bala Deshpande 5:42 PM on March 08, 2011
Congratulations Brian and Dharmesh! I am a customer and big fan of hubspot.
One interesting item from the Sources chart which Brian shows above: it looks like most lead generation comes from campaigns and a very small % from organic searches.
I wonder if it evolved into this or was it always so for hubspot? I found them through a referral (Manta).
Lindsay Garrison 5:58 PM on March 08, 2011
Brian, Dharmesh & Hubspot Team - Wow, you guys scored a hattrick! Congrats. I'm looking forward to the next play.
Mark Greim 6:03 PM on March 08, 2011
This is fantastic news. I'm anxious to participate in the benefits that will come from plowing the funding into R&D.
Perhaps you can also bring back the rankings on the keyword grader. It was very relevant and useful to me, and I miss it! :)
Greg Elwell 6:21 PM on March 08, 2011
Congrats team HubSpot! I'm more delighted than ever to be on this journey with you as a certified HubSpot partner. Best wishes for continued success.
Greg
Tor Ellingsen 6:27 PM on March 08, 2011
Concratulations, great news- looking forward to hear about R&D and use Hubspot in the future.
Paul 6:37 PM on March 08, 2011
Big step guys, well done, and don't lose your startup engaging atmosphere !!
Pete Clark 7:20 PM on March 08, 2011
Great stuff. Congrats! Can't wait to see what is next
Paula Pollock 7:25 PM on March 08, 2011
Great news. Now you can fund all the upgrades we've been asking for on the Ideas site! (Start with List Manager and add newsletter functionality)
Jeff Bennett 7:27 PM on March 08, 2011
Congrats Brian, Dharmesh and the entire team @ HubSpot! I love a Boston-based company seeking a market/category leadership position. Go go go to the Hubspot team!
craig 8:02 PM on March 08, 2011
I agree Paula! Upgrade and functionality wish lists to fruition? Exciting stuff.
Mark Zaifman 8:32 PM on March 08, 2011
Congratulations! Full steam ahead.
Andres Heuberger 9:27 PM on March 08, 2011
Congrats! We love HubSpot in our medical translation company, and we are looking forward to seeing how you invest your new riches. For instance, with Google and Salesforce on board, can we expect tighter and more feature-rich integration with their offerings?
Jill Konrath 9:28 PM on March 08, 2011
AWESOME! And well deserved. Your company does a great job already. I can't wait to see what the future holds.
Jeremy Levine 10:08 PM on March 08, 2011
Thanks for doing this in Boston! You guys are so awesome. #fanboy
Jenna White 10:24 PM on March 08, 2011
Congratulations Brian, Dharmesh and the entire HubSpot team! Your hardwork and dedication has definitely paid off.
Many thanks for providing the knowledge and tools necessary to insure small businesses not just survive, but thrive.
I'm just one of many satisfied customers, but I'm sure I can speak for others when I say, "Keep it up, Rock Stars!!!"
Amber-Lee Dibble 11:43 PM on March 08, 2011
Congratulations! (and) Thank you all for dreaming of and seeing HubSpot. Yeah (!) for you all, AND by eating your own dog food,it shows everyone not only does it work, make lots of money, but it is also brightened by the goodness of it. Thanks again, for finding us.
~Amber-Lee Dibble
nic windley 2:11 AM on March 09, 2011
Get big or go home..love it!
Bram van Ast 2:56 AM on March 09, 2011
CONGRATULATIONS Brian, Dharmesh and the Hubspot Team. Fantastic news and a recognition for your good work. Look forward to an even brighter future!
Jonathan 7:37 AM on March 09, 2011
"3. Eat our own dog-food - From day 1, we ate our own dog-food. Since the early days of HubSpot, we have lived in our own software..."
This is true to an extent - but although it was released as "beta", I think it bears noting that you do NOT use your own Email Manager for lead generation. A nuance that this post may lead some to overlook or misinterpret.
I look forward to that money going towards heavy investments in that tool - as Marketo and Eloqua eat more of their "dog food" in that respect.
Thanks for keeping us in the loop about your funding. That's certainly enough to plow ahead with development at a healthy clip!
Dale Berkebile 8:14 AM on March 09, 2011
Congratulations guys! It will be exciting to see where you guys go. The last 2 years riding this train has been pretty amazing. You've changed our business and now really changing an old industry into a new way of doing things. This is a big task, but your system works so even the old guys can't argue when they see the results. Keep plugging away and I know it's going to be fun.
Great job!
David 8:31 AM on March 09, 2011
Congratulations on bringing the mentality and look and feel of a silicon valley company to the HUB where many others have failed! Love your "Go big or go home" philosophy which has been missing from this region. Keep it up and be a model for many!
Martyn Hodgson 9:06 AM on March 09, 2011
Delighted in your success!
Well deserved.
Your teachings were the basis for the success of my first business.
Now as a partner I'm happy to share it with others.
Tom 9:17 AM on March 09, 2011
"2. Easy and Integrated"
Not with Salesforce! HS can only link to Leads. How about using this new fundig to hire more developers and get the linkage to Salesforce Contacts released sooner??
Koleen Singerline 9:21 AM on March 09, 2011
Congratulations to Brian, Dharmesh and the entire team for making the HubSpot experience easy, enjoyable and effective. Our clients love the impact of inbound and the closed loop marketing. Yes, you definitely got it right. Hubspotting is to marketing as Googling is to search.
Nolin LeChasseur 10:41 AM on March 09, 2011
How are you guys measuring market share in your infographic? And what are your data sources given that so many of those companies are private? I'm not clear how you claim to have more than 50% share of the marketing automation market.
Kevin Whalen 10:43 AM on March 09, 2011
Congratulations, Brian and Dharmesh. It's been great fun to watch the success breed success.Keep it up.
Stephen Fay 11:11 AM on March 09, 2011
Very well done!
John Knight 12:12 PM on March 09, 2011
Great job, I am glad to know you eat your own "dog food" products and services.
Wendy Bryan 12:38 PM on March 09, 2011
Congratulations. I am a huge fan. I feel like I go to the University of Hubspot every day with your fabulous content.
Javier Lorenzo 12:55 PM on March 09, 2011
Great news, guys!
COngratulations
Lucas Burton 1:59 PM on March 09, 2011
I take it this means you won't be using Bing's data anymore?
scott sweeney 1:59 PM on March 09, 2011
Great work. Congratulations. Thanks for helping us generate almost 10,000 leads in the last 12 months!
pickup games 5:14 PM on March 09, 2011
Congratulations, can't wait to see this in the future!
Frank Suyker 5:40 AM on March 10, 2011
Congrats! Hope to see more improvements the next few months/years. Every (webdesign) company should know about this software.
Dev Basu 10:43 AM on March 10, 2011
There's only a few other companies that are in the SaaS space that do things as well as you guys do. Congrats on the funding! You're emulating the success of much larger giants, but in the process becoming an inspiration for many startups at the same time.
nancy chou 2:05 PM on March 10, 2011
Congrats Hubspot! I just want to thank my VAR Partner Account Manager, Chris Alexis who has been incredible--always upbeat, responsive and effective. I trust this reflects Hubspot's leadership style and culture. If so, kudos to the management team and rest of your staff.
On the other hand, I'm glad you'll be spending $ on your technology. Chris can tell you the unfortunate incident of losing a client (my first HubSpot installation) after only a month due to HubSpot's technology glitch. Pls feel free to contact me or Chris directly if you want more account specific details.
Cheers - Nancy
Principal
Nancy Chou Marketing Consultants
www.ncmktg.com
408-666-9230
Dave Heinrich 4:34 PM on March 10, 2011
Hi Crystal, please contact me so we can discuss ways to work together. I am a strong supporter of the Non-Profit community & may be able to be of considerable value to your efforts
Brian Halligan 9:05 PM on March 10, 2011
Thanks to all of you for your encouragement and well wishes. Now that the fun of the launch if over, we are back to work!
@Paula Pollock @Craig -- We are looking at the ideas.hubspot thing carefully and will start picking them off more quickly. List manager is going to get a bunch of attention.
@Andres Heuberger @Tom -- Yes, part of the proceeds will definately go to deeper integration with both Salesforce and Google. Stay tuned.
@Jonathan -- Yes, working on some of that middle of the funnel stuff is high high high on the list and will get a ton of attention. We're doubling down there.
@Crystal -- Our software starts at $250/month and if you use it and follow the methodology, you'll see a big inflow of leads (or in your case) donations. I think its worth it, even for a small non-profit. I asked one of my folks to reach out to you and talk to you about a specific non-profit plan.
@Nolin LeChasseur -- We got the data from "2011 Demand Gen Report" and recent company press releases. The one thing we are missing is Infusionsoft...we don't come across them much, but someone mentioned that they should have been included -- oversight on our part.
Bernie Borges 9:10 PM on March 10, 2011
Brian, Dharmesh, Team,
Congrats on this milestone. I've always been impressed with your vision and ability to execute.
Your product is maturing nicely. I'm looking forward to seeing tighter integration with CRMs and more API capabilities.
As a certified partner, I'm thrilled to see the investment you're making in the VAR program.
Regards,
Bernie Borges
Find and Convert
Crystal 9:12 PM on March 10, 2011
@Brian. Thanks for your thoughtful words. Adam has followed up and I look forward to future Hubspot developments!
Best SEO Practices 7:35 AM on March 11, 2011
Wowww, great business idea, congratulations, keep thinking outside the box... Will try the trial version.
Zach 4:07 PM on March 11, 2011
Congrats Hubspot!
David 12:07 AM on March 12, 2011
Congrats!
The goal of trying to be the only winner with the right investor to achieve the ambitious Vision... sounds great! Good luck with the funding!
Casey 7:15 PM on March 16, 2011
My favorite part of the entire post: "we ate our own dog-food." That is what all successful companies need to do and I always try to convince my clients of that. Congrats HubSpot!
Laura O'Hear Church 1:15 AM on March 25, 2011
You nailed the "need" with the right mix for the age, and I for one am most impressed. Having taken a dozen years off to be a freelance journalist & contract lobbyist & raise kids, I jumped back into advertising, spend my spare time learning Social Media, embrace the new technology, and feel in my gut that INBOUND is going to be THE leader, espcially for our kids. I call on national retail, restaurant and grocery chains, and I can tell you that they intuitively sense the switch, but can't let go of their death grip on circulars and in home, fight-in-the-mailbox-to-be-noticed, advertising! BRAVO....Laura.