The world has been turned upside down the past few weeks, but one lesson of business remains as important as ever: treating your customers well is the best avenue to future business strength, particularly at a moment of extreme stress.
As businesses come to terms with the economic crisis underway, executives are moving resources from customer acquisition to customer retention — and that’s proving very lucrative to startups that service the customer success market.
Case in point: New York City-based Catalyst, which I profiled just last summer following its $15 million Series A led by Accel’s Vas Natarajan, has seen huge revenue growth the past few months. The data-driven customer success platform has seen its revenue grow by 380% since the Series A financing according to CEO Edward Chiu.
Steep revenue growth is (unsurprisingly) attractive to investors, and in a moment of fortuitous timing, the company signed a $25 million Series B term sheet with Spark Capital just as the COVID-19 crisis was getting underway.
Chiu said Catalyst wasn’t seeking the investment, having much of its Accel round still in the bank, but he ultimately decided that having the extra capital in hand through a looming economic recession was the right decision. The capital officially hit the bank account at the end of March, and was led by the firm’s growth investor Will Reed.
While the company didn’t disclose the valuation, a source with knowledge of the matter quoted a valuation of $125 million. That’s a serious valuation for a company that launched just two years ago in April of 2018.
Outside of more funding, the core story of the company’s product remains the same. Catalyst wants to bring together all the data sources and team members who interact with customers — everyone from designers and engineers to customer success managers — into one dashboard to ensure that everyone has accurate and up-to-date access to all the information they need on the health of every customer.
One growth area that the company is exploring outside of the B2B space of its existing customers is in healthcare, where the company has seen some inbound interest. Chiu says that Catalyst is exploring the steps required to reach HIPAA compliance with its platform, and hopes to expand to more sectors over time with the capital from its Series B.
When we last checked in with the company, Catalyst had 19 employees and was targeting 40 employees by July 2020. Chiu said that Catalyst is already at 35 employees, and will likely hit 60 to 70 employees by the end of the year.