Evernote, the personal data and productivity app that now has over 45 million users, is today announcing it has raised another $85 million, with 75% of that, $63.75 million, in the form of a secondary investment. We have heard that the raise was looking to be done on a $2 billion valuation.
This round of financing, which brings the total raised by Evernote to $251 million, bring two new investors to the company. AGC Equity Partners, via its majority-owned, mobile-focused affiliate m8 Capital, is leading the round; and Valiant Capital, which also invests in Dropbox, is participating, along with existing investors T. Rowe Price.
In a blog post announcing the news, Phil Libin writes that this round wasn't raised because it needed cash. "It's nice to have this extra peace of mind, even if we don't strictly need it." (That was also the case only seven months ago in May, when Evernote raised $70 million, on a $1 billion valuation.)
Rather, it is "to decouple liquidity from exit" and to focus less on "external market conditions" — that is, to reduce any pressure for an exit from existing shareholders, by reducing their stake in the company, and bringing in others who perhaps have a different approach.
"This gives some liquidity to shareholders and and rotates out shorter-term horizon investors for longer term horizon investors," Libin told me in an interview earlier today. It's about adding more investors who will stay with the company even after it eventually goes public.
In the blog post he describes it like this: "By giving early shareholders the opportunity to sell some of their holdings, we reduce the pressure to exit while at the same time forging relationships with important new long-term investors who can help shepherd the company to, through, and beyond an eventual IPO," he writes. But don't hold your breath for that IPO to come soon. Today he told me it would be "a few years" away still, possibly three.
The money will be used to continue to build more products that will attract more users, and hopefully convince a growing proportion of them to pay for extras. Evernote has been running an enterprise-focused beta of Evernote Business, but it also has moved into apps to manage your contacts, record what you've eaten, pictures, and more.
Libin also told me today that "it's good to have some money put away" for acquisitions, which we should expect to see in 2013. As for what that might be, he said Evernote didn't plan too much in that way — it just means you end "vastly overpaying" for something to fit into a rigid roadmap, he said. Instead, they take an organic approach. The products that Evernote people love to use themselves are the ones they would like to buy.
Libin is well-known for his desire to build Evernote as a that a startup that will last for the next 100 years. He is bullish on Evernote's particular business model: as a consumer app, it wants to create the sense of a secure place for your information for the rest of your life and beyond. To that end, Evernote eschews advertising and any kind of commercial big-data play, and believes that revenue will come from people paying for extra, premium services on top of a compelling free service. "We think you will want to pay for the things you like," Libin told me earlier this year. Today he noted that as Evernote has continued to grow, the proportion of paid users has remained steady and just as they had projected it would.
As for the investment details, Libin tells TechCrunch that a number of investors sold small percentages of their stakes, but no one has cashed out completely. Past investors include DoCoMo Capital, Morganthaler Ventures, Sequoia Capital, Meritech Capital Partners, CBC Capital, Harbor Pacific Capital and Allen & Company, along with angel investors.
This is not the first secondary sale in Evernote. Troika Ventures, the venture division of Troika Dialog, sold its stake in Evernote in February of this year to Sequoia, for what is thought to have been a 10X return on investment. At the time, Evernote had 20 million users, compared to over 40 million today.
It's not clear how much that growth would have impacted the company's valuation — which, considering the current pressures we are seeing for startups to raise cash, may have ended up lower than the $2 billion we heard was being shopped around.
While Russian Troika was one of Evernote's earliest international investors — later ones include China's CBC Capital and the Asia Pacific-focused Harbor Pacific Capital — this latest round brings more to the table. AGC is Kuwaiti-backed and both AGC and m8 are both headquartered in London. Joe Kim, who led the investment for AGC/m8, is a partner at both.
International is an important market for Evernote. Already it accounts for about 70% of its customer base and Libin, who himself was born in St Petersburg, says it wil be a "big focus" in our 100-year plan.
Evernote has slowly been building up its international products to meet demand. Just earlier today, it got integrated into the Tecent One Browser for users in English, Thai and Indonesian languages to clip and save webpages into their Evernote accounts. It was already integrated into the browser in India.
Evernote allows users to capture, organize, and find information across multiple platforms. Users can take notes, clip webpages, snap photos using their mobile phones, create to-dos, and record audio. All data is synchronized with the Evernote web service and made available to clients on Windows, Mac, Web, and mobile devices. Additionally, the Evernote web service performs image recognition on all incoming notes, making printed or handwritten text found within images searchable.
m8 Capital is a venture capital firm investing in mobile technology. m8 Capital acquires interest in companies which are positioned for leadership in key segments of the mobile industry. m8 Capital works with portfolio company management to leverage the firm’s own extensive resources and global relationships to ensure that it’s portfolio companies exceed their goals. Rather than wait for innovation, m8 works with its portfolio companies to make innovation happen.
ACG is the social agency. ACG is an internet and social media marketing company that operates internationally. The company is known for applying knowledge from other fields to create more impactful websites and social media campaigns. The company commonly refers to its work as "compelling, interactive experiences". The company was founded by Justin Long to apply his self-taught design skills. Justin continues to manage the humble company in Vancouver, BC.
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