Hootsuite has long been reported in the media as one of Canada’s few unicorns, the term for startups valued at $1 billion or better. But a recent Bloomberg report is calling that label into question.
In September 2014, Hootsuite raised $60 million at a reported valuation of $1 billion. Bloomberg’s report claims the actual valuation to be between $700 million and $750 million, citing unnamed sources close to the matter. The report goes on to note that Hootsuite and its investors have never publicly contradicted the unicorn label.
“We do not have insight or input into the valuation formula of our public investors.”
It certainly wasn’t dismissed by CEO Ryan Holmes when BetaKit spoke with the Hootsuite CEO in October in our reporting of the launch of AngelList Syndicates. At the time, Holmes expressed an enthusiasm for the launch, saying that he would be interested in cutting a cheque to entrepreneurs and being part of a movement to build “100 Hootsuites in Canada.”
“There are very few industries where you can build a billion-dollar business in under seven years, and technology is one of those verticals,” said Holmes. “I think about how when I was fundraising, it was difficult, and I’m really excited to be able to help other entrepreneurs fundraise themselves.”
Bloomberg’s report says that initial requests for comments on the story were declined by a Hootsuite spokesperson. Following publication, CEO Ryan Holmes tweeted that “Hootsuite is definitely north of 1b today.” The resulting conversation with the Bloomberg reporter, one Gerrit De Vynck, led to the Canadian CEO directing De Vynck to call a sex hotline. Holmes later apologized.
Apologies on an attempt at humour today. It was offside.
— Ryan Holmes (@invoker) March 1, 2017
BetaKit also reached out for comment on Hootsuite’s valuation, and received a statement credited from the company’s CFO, Sujeet Kini. “Based upon assessments from independent third parties, our current valuation is in excess of $1 billion,” Kini said. BetaKit has asked for clarification on the specific independent third party sources Kini referenced, but at time of publication has not received a response.
In early 2016, it was reported that Fidelity, which led Hootsuite’s $60 million round, wrote down its stake in Hootsuite by 18 percent. At the time, Holmes sent this statement to BetaKit on the issue:
“We do not have insight or input into the valuation formula of our public investors. They applied public averages to their private portfolio. I can tell you that this valuation is not indicative or reflective of our business outlook, growth rates, and operational metrics. In anticipation of a more challenging financial markets in 2016, my team has proactively organized for cash neutrality in this year. We are on track and the business is healthier now than ever.”
The company eventually announced its cash-flow positive status by August of that year. The company has since aggressively pursued M&A opportunities, including AdEspresso and LiftMetrix last month.
“We’ve hit a number of milestones including cash flow neutral which is a really great one,” Holmes told BetaKit in October. “We’ve got a ton of really interesting things in the pipes that you’ll see drop before the end of the year, we’ve been busy building products and looking at different M&A opportunities. The cash positive positions have given us a great springboard to be able to look at different opportunities.”
Additional reporting by Douglas Soltys.
