Facetune Maker Lightricks Raises $130 Million for M&A

Lightricks Secures $130 Million to Expand Creator Platform

Lightricks, the company behind the popular Facetune application, has successfully raised $130 million in a new funding round. This investment consists of $100 million in primary funding and $30 million in secondary funding, resulting in a company valuation of $1.8 billion. To date, Lightricks’ total funding reaches $335 million.

Investment Details and Participants

The latest funding round was jointly led by Insight Partners and Hanaco Venture Capital. New investors including Migdal Insurance, Altshuler Shaham, and Shavit Capital also participated. Existing investors, such as Goldman Sachs Asset Management, Claltech, Harel Insurance and Finance, and Greycroft, continued their support.

This funding follows a $135 million pre-pandemic raise that previously established Lightricks as a unicorn company.

From Facetune to a Mobile Editing Suite

Headquartered in Jerusalem, Lightricks initially gained prominence with Facetune, an application offering consumer-level photo-editing capabilities akin to Photoshop. The app became widely adopted by online influencers seeking to enhance their images for platforms like Instagram.

However, the rise of image-editing apps like Facetune sparked debate regarding the potential impact on body image, a concern highlighted by internal research at Facebook suggesting negative effects on teenagers’ mental wellbeing.

Building upon the success of Facetune, Lightricks expanded its offerings to include Facetune 2 and a broader range of mobile photo and video editing applications. The company also broadened its focus to serve online marketers and small businesses.

Growth Fueled by the Pandemic and Video Content

The company experienced significant growth during the COVID-19 lockdowns, with a 90% increase in app usage within the U.S. Downloads of Videoleap, its video editing application, increased by 70% since the pandemic’s onset, coinciding with the growing popularity of TikTok.

Currently, Lightricks boasts 29 million monthly active users, with over 5 million being paid subscribers. Users generate approximately 78 million monthly exports, demonstrating the company’s substantial influence within the creator economy.

Revenue and Future Strategy: Acquisitions and Expansion

Lightricks is projected to exceed $200 million in revenue in 2021, with plans for a 40% increase in the following year. The company is now shifting its strategy towards growth through acquisitions.

“Our plan is to evolve into a comprehensive creator platform, providing support throughout the entire creator journey, from content creation to monetization,” states Zeev Farbman, CEO and co-founder of Lightricks. “To achieve this, we are actively pursuing acquisition opportunities, alongside internal development of new services. Our M&A strategy is centered on becoming a leading creator platform.”

The company intends to pursue between three to five acquisitions, each with a budget in the tens of millions of dollars, while also remaining open to larger deals.

Team Expansion and Global Presence

Lightricks currently employs 460 individuals and plans to add 60 more by the end of 2021. The long-term objective is to reach a team of 1,000 employees by the end of 2023.

Growth will occur across various departments, including development, design, and marketing. While Jerusalem remains a primary hub, the company plans to expand its teams in Haifa, London, and Shenzhen over the next two years, potentially adding further locations through acquisitions.

The London office, currently the largest outside of headquarters with 23 employees, is expected to grow to 35 by year-end and closer to 50 or 60 by the end of 2022. Expansion will focus on the development of a new photography application, as well as customer experience and marketing teams.

Focus on Content Creation in the U.S.

Lightricks’ U.S. operations will primarily concentrate on content creation. This includes developing a diverse range of original, acquired, and co-produced content designed to inspire, educate, and entertain creators throughout their careers.

This content will encompass various formats, including written articles, videos, audio recordings, and both short-form and long-form pieces.

Investor Confidence in the Creator Economy

Investors express optimism regarding Lightricks’ potential for continued growth within the expanding creator economy.

“The creator economy has fundamentally altered how society interacts with social networks,” says Pasha Romanovski, co-founding partner of Hanaco Ventures. “Audiences consistently consume information through diverse content channels. Lightricks’ platform empowers creators with a more professional and high-quality toolkit to optimize their content. As content creators increasingly monetize their work on social media, Lightricks’ platform is poised to become a valuable one-stop shop for its users.”