let it ride

Is it beginner's luck or a sign of things to come?

A venture capital firm made one of its biggest initial investments today — and the reward goes to a Palo Alto mobile marketing automation provider.

Tenaya Capital of Woodside, Calif. led a Series B funding round of $45 million for Kahuna. The funding represents 80 percent of Kahuna's total funding in three years as a marketing technology provider. It has now raised $56 million since it was founded in 2012. Sequoia Capital and SoftTech VC also invested in this round.

Adam Marchick, former venture capitalist and current CEO and co-founder of Kahuna, told CMSWire the company will invest the money “across all disciplines and not just one.”

headshot of adam marchick, ceo of Kahuna

“We will be balancing the company, focusing on the customer,” he said when asked what Kahuna will do with the $45 million.

Targeted Marketing

In a statement, Kahuna officials call their company the “leader in communication automation for the mobile era” and said they can challenge Salesforce (ExactTarget capabilities) and Oracle (Responsys) for the industry lead.

Kahuna’s platform aims to help marketers deliver personalized messages across channels on all devices — at the right time for each individual it targets. Douglas Roberge, strategic services consultant at Kahuna, described the platform's capabilities this way: “the ability to automate personalized communication at scale.” They call this “communication automation.”

“People want to be communicated with instead of marketed at,” Roberge told CMSWire. The days of the “historic batch and blast” marketing techniques are done, he added.

MarTech Investment

Tenaya Capital’s investments comes after a hot midsummer of MarTech investments. Radius secured $50 million late July for its B2B predictive marketing software.

InsideView, the San Francisco-based sales and marketing software company, secured $32.5 million about a week later in a round led by Spring Lake Equity Partners. This investment brings InsideView’s total funding to more than $80 million. 

As of last fall, there’s been more than $21.8 billion of venture capital and private equity invested marketing technology companies, according to Scott Brinker, of the popular Chief Marketing Technologist blog. Brinker did not include money raised from public offerings, M&A deals or other untracked investments in this figure.

Mark Ghermezian, co-founder and CEO of Appboy, a New York City mobile marketing automation provider, told CMSWire it’s great to see more capital being invested in mobile marketing automation, as it will “benefit everyone around the table.”

“The $45 million investment in Kahuna validates the overall market and its size,” Ghermezian added. “It also further illustrates that mobile-first solutions are now poised to define the market across their respective verticals, as well as the need for automated marketing technology. I believe that we'll continue to see investment dollars funnel into marketing technology, especially the mobile first, data-driven platforms, in the coming year.”

Big Initial Bet

Meanwhile, Tenaya Capital’s banking on Kahuna. The company’s backed companies in this space already, like Cambridge, Mass.’s HubSpot and AgilOne of Sunnyvale, Calif., though managing director Ben Boyer did not divulge specifics on the size of the checks. Tenaya led a funding round of $25 million for AgilOn, CMSWire learned.

“Kahuna represents one of the largest initial investments Tenaya’s ever made,” Boyer said. “We do invest in a number of other marketing technology companies.”

Tenaya liked Kahuna because it sees it as the market leader in relation to mobile-based marketing.

“For us that's not just push, but rather push plus email,” Boyer told CMSWire. “It’s thinking about communicating with consumers on any device in any environment in which they interact with a mobile application or website.”

He called Kahuna the “winner” and “certainly the earliest leader” in this space.

“We believe there will be a new breed of marketing automation companies created in today's world — one where mobile is an extremely important integral aspect of that communication,” Boyer added. “Responsys and ExactTarget were built well before people mobile in the way they have today. There needs to be a new type of technology, and we think Kahuna is that technology.”

Oracle declined to comment for this piece. Salesforce did not respond to a request for comment.

Platform Updates

Kahuna counts Yelp, The Hearst Corporation, Overstock.com, The Weather Channel and Yahoo among its clients. It partners with tech providers such as Optimizely, which provides in-app optimization, and Amplitude, a mobile analytics provider.

screenshot of the technology that powers the kahuna mobile marketing platform

Kahuna also unveiled advancements in its flagship offering today, which officials said in a statement is powered by big data and modern machine learning. They went on to state it connects brands with customers wherever they are — web, email, mobile, social channels — through personalized communication at scale.

New email functionalities will allow the company to compete with “email marketing incumbents” ExactTarget and Responsys according to officials. It also announced infrastructure updates that will allow it to support future use cases to work with “increasingly massive data sets.”

“We’re focused on making every message count and giving marketers the power to send millions of messages while hitting their marketing goals but delivering personalized messages,” Marchick told CMSWire. “... People are starting to understand that mobile changes everything. It’s as fundamental as the move from on premise to (Software-as-a-Service). … People don’t want generic spammy messages. They want to be communicated with. We’ve remained the solution that will work for mobile. Other systems were built when sending email was a novel concept.”

Title imageCreative Commons Creative Commons Attribution 2.0 Generic License by  Jamie McCaffrey