Khosla Wins the Bidding War for GroupMe, New York's Start-Up of the Moment
Co-founders Jared Hecht and Steve Martocci have raised a $9 million round led by Khosla Ventures, sources say. I’m told the deal will give the company a pre-money value in the “mid-20s.”
Original investors, including First Round Capital, Betaworks, Lerer Ventures and Ron Conway’s SV Angel, who put some $850,000 into the company earlier this year, are all slated to invest again.
As The Business Insider’s Nicholas Carlson has reported, a bidding war for the right to fund GroupMe broke out in the past few weeks. The company ended up with multiple term sheets to pick from before signing with Khosla Monday.
So what is it? GroupMe is a simple, free service that lets users send text messages, on any kind of phone, to groups of friends. It competes against a handful of similar companies, but investors are impressed by its growth chart, which shows it adding tens of thousands of users a month.
They also like the fact that the company is explicitly targeting a wide range of users–not just those using Apple’s iPhone and Google’s Android. GroupMe works on any run-of-the-mill “dumbphone,” and part of the company’s pitch is that salt-of-the-earth folks (Church groups! Hunters!) have been using it since it opened up in August.
It’s also worth noting that Hecht and Martocci left jobs at very red-hot start-ups–Tumblr and Gilt Groupe, respectively–to put their own thing together. The two formally hatched their plan at TechCrunch’s Disrupt Hack Day event in May.
GroupMe plans on adding an array of bells and whistles to the service, like the ability to send pictures, and a sort of jerry-rigged location feature in the near future. And the more of those it adds, the more it will look like something that aspires to play in the same sandbox as Twitter and Facebook.
But what investors are really hoping for, at least right now, is that GroupMe follows the same trajectory of another zero-to-hero New York start-up–Foursquare. It’s worth noting that Khosla tried very hard to fund that company’s last round, but missed out. It got this one.
I shot this interview with the two co-founders just two weeks ago* but wasn’t going to run it, because the two of them are framed so comically–Martocci is a tall dude, but he’s not that much taller than Hecht.
But it’s better than nothing, and now that these guys are officially the hot start-up of the moment, it’s time for the rest of you to meet them. Sorry, Jared and Steve. But lousy video about big news is a high-quality problem.
*Side note: Hecht had just flown up and back to Boston earlier that morning, which seems that much more interesting in retrospect.