This morning Webflow, a software company that helps businesses build no-code websites, announced that it has raised a $140 million Series B. The round, led by returning investors Accel and Silversmith, comes after the startup raised $72 million in an August 2019 Series A.
The new funding values Webflow at more than $2.1 billion it said in a blog post that TechCrunch viewed before publication. CapitalG, an Alphabet venture capital group, joined the Series B as well, with its investor Laela Sturdy joining the startup's board.
Webflow offers a software that helps customers build websites without the need to write code; the company also offers hosting and content-related capabilities.
Webflow's product fits into a category of companies arguing that building software for the internet should get easier over time, not harder. TechCrunch explored the no-code, low-code space in 2020, including asking investors bullish on its market about their views concerning its future.
Webflow CEO Vlad Magdalin described the round as "opportunistic" for the company, telling TechCrunch that his company was not low on cash when the deal came together. Indeed, Magdalin said that his company ended 2020 cash-flow positive.
So why raise more money, let alone such a huge round? The CEO described the funds as "courage capital," funds that will allow it to make investments into its business that may not have short-term revenue impacts. Magdalin said that the money may be spent on its enterprise products, support team, platform and recruiting.
In an email, Accel investor and Webflow board member Arun Mathew echoed the CEO's comments, adding that the company doubled its customer base in 2020.
That Webflow managed to break into the realm of startup profitability is less surprising when we recall that the no-code software company bootstrapped for more than a half-decade before taking external funds; it has done this before.
Raising capital has other impacts on a business than the ability to raise spend. New capital, a higher valuation, and noise about a business can bolster recruiting efforts and assuage customers concerned that the startup in question could either evaporate due to a lack of cash, or wind up bought, and either stripped by a private-equity firm, or subsumed by a tech giant.
Big companies don't want to tie themselves to a product that could disappear. Webflow, now valued at $2.1 billion after its Series B closed, may have allayed those concerns for the time being.
Asked how 2020 went for the company, Magdalin said that its business doubled, which he described as an acceleration of its previous results.
It's not clear from our vantage point if the company is in the eight or nine-figure revenue range, so it's hard to vet how strong a roughly 100% growth rate is for Webflow; that it appears to have bested its 2019 growth rate in 2020 is encouraging for its future IPO prospects.
The company could see strong growth in 2021. Webflow's CEO told TechCrunch that his company's move up-market is starting to bear fruit. After noting that average contract values, or ACV, for its larger accounts were several orders of magnitude bigger than its sales agreements with SMBs, Magdalin said that its enterprise customers only account for around 5% of its present-day business.
However, the CEO said that his firm had only begun to target the enterprise cohort last year, and expects to grow its larger-account business by a factor of 10 this year.
And the company has big product plans, including building out its service to support richer and more powerful website creation. In the CEO's view, websites are merely part of the software world, and he expects no-code tooling to take on more and more complex software tasks over time.
That could expand the broader no-code market, in our view, perhaps creating more space for startups to build services that allow for non-developers to depend less on engineering teams over time.
Mathew shares Magdalin's bullish view on the no-code market, saying in an email that "the market is moving very quickly to being bullish on no-code tooling," adding that we are "still very early in the adoption curve."
Given that take, it's not hard to see why Accel would want to double-down on Webflow. Accel has a history of making large-dollar bets into companies that bootstrapped to scale, including Webflow and Qualtrics. In the Qualtrics example, Accel led its Series A, B and C rounds (worth a combined total of $400 million).
To see Accel lead another round for Webflow, then, is in keeping with prior investing patterns from the firm.
CapitalG's Sturdy, Webflow's new board member, told TechCrunch in an email that her firm has been "bullish on the massive potential of no code for years," leading it to hunt for "the most promising companies utilizing no code to transform sectors and democratize access to key tools." Let's see what it can do with another huge check and some time.