WorkBoard, a SaaS startup that provides goal setting and management software to other companies, announced today that it has closed a $30 million Series C. The new capital comes less than a year after the startup raised a $23 million Series B. WorkBoard has raised $66.6 million to date, according to Crunchbase.
Why did WorkBoard announce a Series C just 10 months after its Series B? That’s what we wanted to find out. As it turns out, the answer is growth.
The company is growing quickly, making it an attractive investment for the venture class. However, it’s useless to explain its growth in numerical terms if we don’t understand why it is growing as quickly as it is.
WorkBoard provides software and services to other companies relating to how they plan and track their progress against their plans. More simply, WorkBoard helps other companies set and leverage OKRs, an acronym that stands for “objectives and key results.”
If you’d like a longer-winded explanation of how the concept works, my notes on the company’s Series B are the jam. Briefly, OKRs are a planning framework that help companies set their course intelligently, and execute across smaller tasks that add up to the direction they want to go. You complete “key results” over a given period of time, which roll up into your “objectives.”
It’s a pretty okay way to set up a company’s planning system. OKRs are popular in Silicon Valley, where Google popularized the method. It was not clear, at least to your humble servant, how far the idea had spread when WorkBoard raised its Series B last year. What if the startup raised a bunch of money after selling into fertile ground (startups aware of OKRs), but struggled when it went after other, non-tech companies?
Whoops. After boosting its annual recurring revenue 3.5x in 2018, WorkBoard tripled its ARR again in 2019, according to CEO Deidre Paknad. Thinking out loud, WorkBoard raised its Series A in December of 2017. It probably had $1 million to $3 million ARR at the time, a wide but regular-ish range of ARR for a startup raising its first institutional (priced) round. Given its 3.5x and 3x results in 2018 and 2019, starting right after that Series A investment, the company’s ARR is now likely over $20 million, and probably closer to $25 million.
So if it can double this year, the startup may begin to approach IPO scale in 2021, provided that its growth can keep up.
On that point, I asked Paknad about her market, especially in regards to how much work she and her employees had to do in terms of market education; did they have to bring the gospel of OKRs to companies, sell them on the idea and then sell its software? Or had the need to teach about OKRs themselves gone down?
She indicated that instead of needing to pull the market toward her firm, the trendlines are better than neutral. According to the CEO, it was harder to sell OKR software “five years ago” because “the need to educate” a half decade ago “was intense.” Companies were stuck on their love of PowerPoint and similar, dated tooling. However, that need for “education has declined rapidly” Paknad said.
She says that in her company's experience there is “ever broader recognition that if you want to drive smart growth -- not growth at any cost but smart growth,” companies will need to have “everybody in the organization aligned, and you need to be able to see what they [are] aligned on.”
OKRs are a natural and well-explored way to attempt to do so.
That market movement has helped the company have very efficient operations, in terms of the usual raft of SaaS metrics that we understand. Paknad told TechCrunch a few things that stuck out:
WorkBoard has a “hyper-efficient” enterprise sales cycle, closing new customers in “under 60 days” that are “several hundred thousand dollars in average deal size.”
That its “average deal size has more than doubled since the beginning” of 2019.
For every $1 that WorkBoard spends on sales and marketing costs, the company generates “about $2 in new ARR.” (That’s way better than the $0.86 in average ARR generated by $1 in new sales and marketing spend for SaaS companies more broadly.)
And, it didn’t need to raise this round, with Paknad telling TechCrunch that she hasn’t “spent the 23 [million dollars] from March yet,” but that it decided to add capital because that “opportunity really is unfolding in the way we would like,” and that her firm has an “opportunity to have really definitive enterprise leadership.”
The investor perspective
TechCrunch got Ulevitch, WorkBoard’s newest lead investor, on the phone. Ulevitch called Paknad “a force of nature” who “really connects to customers.” That was all well and good, but more fun were his notes on how the round came together.
Paknad told Ulevitch after WorkBoard’s March 2019 Series B that her company would triple in the year. When it did, Ulevitch said he didn’t want to wait any longer to put money into the firm. And the investment came together quickly, with the Andreessen Horowitz investor noting a roughly one-month time frame for the deal’s life cycle.
This round isn’t hard to figure out. Fast-growing, efficient SaaS companies make investors dream of the next Slack. Let’s see if WorkBoard can double or triple in 2020. If so, we’ll be chatting with Paknad about exits and IPOs, not middle-sized, middle-stage rounds.