Vista Equity to Acquire Drift: SaaS Startup Reaches Unicorn Status

Vista Equity Partners Invests in Drift, Propelling Startup to Unicorn Status

Vista Equity Partners has announced a majority stake acquisition in Drift, a company aiming to revolutionize the B2B buying process. This “growth investment” elevates the venture-backed startup to a valuation exceeding $1 billion.

Investment Details and Financial Performance

The specific financial terms of the investment, including the exact amount and Drift’s new valuation, remain undisclosed. However, Drift’s co-founder and CEO, David Cancel, revealed a substantial 70% increase in annual recurring revenue (ARR) in 2020 compared to the previous year.

The company anticipates a similar growth rate for the current year. While currently focused on expansion, Drift is not yet operating at a profit.

Prior Funding and Company History

Before securing this investment, Boston-based Drift had successfully raised $107 million in funding since its founding in 2015. Key investors included prominent firms such as Sequoia Capital, CRV, and General Catalyst.

Drift’s Core Functionality and Value Proposition

Drift is focused on “reimagining the B2B buying experience,” as stated by Cancel. Its software platform integrates sales and marketing teams, enabling them to deliver personalized conversations that foster trust and accelerate revenue generation.

Currently, Drift serves over 50,000 customers, including major organizations like ServiceNow, Okta, Grubhub, Mindbody, Adobe, Ellie Mae, and Snowflake. Approximately 75% of Drift’s customer base consists of mid-market enterprises.

The Rise of Conversational Marketing

Over the past five years, Drift has pioneered the concept of “Conversational Marketing.” This approach empowers marketers to leverage digital experiences for effective lead generation.

Essentially, Drift’s subscribers utilize chatbots to convert website visitors into qualified sales leads. The company strives to eliminate friction in the buyer-seller relationship, leading to increased lead volume and improved sales closure rates.

Expanding into Conversation Commerce

This focus led to the development of a platform encompassing conversational sales, integrating chat, email, video, and artificial intelligence to facilitate conversations not only on websites but also for sales teams. Vista’s investment will accelerate this expansion.

Cancel explained that the strategic investment from Vista will enable the company to accelerate its growth, expand its global reach, and introduce a new B2B category termed “Conversation Commerce.” This interactive approach to conversations is projected to fundamentally transform the B2B revenue landscape.

Bridging the Gap Between B2B and B2C Experiences

Drift aims to emulate the seamless experience characteristic of B2C interactions within the B2B sector. Cancel notes that a significant 80% of B2B buyers now expect a buying journey comparable to that of a typical consumer.

In 2021 alone, Drift’s customers have generated $5 billion in potential revenue through a streamlined customer buying process.

A Milestone for Latino Founders

For David Cancel, a serial entrepreneur with a track record of successfully founding and selling four prior companies, achieving unicorn status held particular significance. He and co-founder and CTO, Elias Torres, viewed it as an opportunity to increase representation within the U.S. unicorn landscape.

Cancel emphasized the importance of inspiring other entrepreneurs of Latin descent, stating, “We believe that we have the responsibility to pay it forward and to help people and to inspire other people who are like us and are often marginalized.”

Torres echoed this sentiment, expressing pride in being among the few Latino-founded companies to reach a valuation exceeding $1 billion.

Vista’s Role and Future Plans

With Vista Equity Partners as a majority owner, specializing in enterprise software, data, and technology-enabled businesses, Cancel anticipates increased operational efficiency and an accelerated pace of acquisitions. Drift has already completed three acquisitions to date.

Despite the recent investment, an initial public offering (IPO) remains a long-term goal for the nearly 600-person company. Cancel believes that Vista’s support will provide a “clearer path” toward achieving this objective.

Vista’s Perspective on the Investment

Monti Saroya, co-head of the Flagship Fund and senior managing director at Vista, highlighted Drift’s compelling growth trajectory and the increasing demand for its conversational marketing and sales tools. He believes these tools are crucial for companies modernizing their B2B commerce strategies.

Vista’s Recent Investments

Earlier in 2021, Vista invested $242 million to acquire a minority stake in Vena, a Canadian company specializing in Corporate Performance Management (CPM) software.