Genius.com Raises More Cash

Genius.com announced that it has closed a new round of funding, led by Emergence Capital, one of the company’s original backers and a leading VC in the SaaS space. Existing investors Mohr Davidow Ventures, Accel Partners and Deep Fork Capital also participated. 

Genius plans to use the additional funding to increase investments in marketing and engineering, particularly around its freemium option, which is targeted at the SMB market.

The company had been a rumored acquisition target in 2010, and has spent much of the last six months tightening its organization to operate profitably. As part of that reorganization, the company has promoted Sam Weber, previously the COO, to the position of CEO. Weber succeeds the company’s entrepreneurial co-founder, David Thompson, who remains as strategic advisor and is still actively involved in the company.

According to company executives, Genius.com is now operating profitably, and is seeing substantial growth from the introduction of the freemium option introduced in Q3 FY2011. The freemium option offers both free services such as email and web tracking to a limited database, while the paid editions offer expanded demand generation features and functionality.

Based on the early success of the freemium model, the company plans to put more resources toward engaging and educating the SMB market. In the quarter ending January 30, 2011, the company said conversion rates from free to paid accounts increased from 2% in Q3 to nearly 7% in Q4.  Nearly 20% of the company’s new business revenue is reportedly driven by the new freemium solution.

“Genius.com’s unique instant-on technology and cost efficient business model have enabled the company to achieve impressive growth while also becoming cash-flow positive,” noted Gordon Ritter, Managing Partner at Emergence Capital.  “This is a very rare combination of qualities in the SaaS space and marketing automation in particular.  We are very bullish on the company’s strategy to pursue new opportunities in the small business space.”

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