Unicorns

WordPress.com parent Automattic posts $300M at $3B valuation

September 19, 2019
The parent company of the platform powering a third of the internet has scored a new nine-figure check.

Automattic, the parent of internet content management services such as WooCommerce and WordPress.com, has raised $300 million from Salesforce Ventures, Insight, Tiger Global and True Ventures. The company now holds a $3 billion valuation, nearly tripling its estimated 2014 valuation of $1.16 billion.

This marks an unusually large round for Automattic, which was founded in 2005 and is based in San Francisco. Since 2006, the company had raised an estimated $315 million, making today's new round equal to 13 years of fundraising. Polaris Ventures, Radar Partners and CNET are some of Automattic's earliest investors, dating back to its $1.15 million Series A at an $8.65 million valuation in March 2006.

Automattic's chief offering, WordPress.com, provides premium services and value-adds to the free, open-source WordPress framework, which, in turn, provides the content management foundation for over 34% of websites. Many of the company's other offerings, such as WooCommerce and Simplenote, also operate on a "freemium" model, offering a basic product for free with the option to buy premium features.

Today's round continues a busy 2019 for Salesforce Ventures, which has participated in over 40 VC rounds this year, according to the PitchBook Platform. Notably, the San Francisco-based venture capital arm of Salesforce forked over $100 million for IPO shares in video conferencing platform developer Zoom Video, priced at $36 apiece. Salesforce Ventures managed to rapidly double its money when Zoom's April debut saw shares soar 72% in its first day to close at $62. The CVC firm has publicly insisted it will be a long-term shareholder, forgoing quick profits while Zoom continues to trade over $80.

Tumblr purchase

Automattic's new $300 million injection follows its August purchase of social blogging platform provider Tumblr for mere peanuts, comparatively speaking. Yahoo bought Tumblr for $1.1 billion in 2013; Tumblr was inherited by Verizon when the telecommunications giant acquired Yahoo for $4.48 billion in 2017. By that time, Yahoo had already written down $712 million of Tumblr's value, partially as a result of disappointing ad sales. Automattic's acquisition came with a relatively microscopic price tag of less than $3 million, leading some observers to suggest a simple crowdsourcing campaign could have drawn more money.

While Tumblr was well known for allowing adult content on its platform, Verizon banned pornography in December 2018 to allow for brand-safe advertising sales. By March 2019, The Verge reported internet traffic to Tumblr had declined nearly 30%. This was in the ballpark of the estimated 22% of Tumblr users who had previously consumed adult content, according to a January 2017 research study.

Automattic has said it has no plans to lift Tumblr's porn ban, instead opting to invest in the platform's core, safe-for-work blogging functionality.

Featured image courtesy of Automattic

Related content