A $1.5 billion series A? Here’s what’s behind those giant rounds.

It's not just an out-of-control funding market.

Illustration of an entrepreneur raining money into the air.

It's raining money. (Hallelujah?)

Illustration: Nuthawut Somsuk/Getty Images

Perch raised a "historic" $775 million on May 26. Transmit Security raised the "largest cybersecurity series A round" ever of $543 million a month later. On Thursday, Articulate is announcing "one of the largest series A rounds in history" — a whopping $1.5 billion for a company that makes software to create online training apps.

No, it's not a sign of an out-of-control funding market (although the funding market is out of control and cash is easy to come by). There's more to these mega-rounds than meets the eye.

Take Articulate, which on Thursday announced that it had raised a cool billion and a half from General Atlantic, Blackstone Growth and ICONIQ Growth for its series A round. The paperwork was all labeled series A because it's the first institutional funding that the company has raised, but it doesn't fit the profile of your typical series A company that raises around $9 million.

Instead, Articulate was founded in 2002 and has been bootstrapped since Adam Schwartz started it with his life savings. The nearly 20-year-old company employs over 300 people in a fully-remote workforce and builds software that enables people to easily build online learning apps. It's profitable and has over 106,000 customers, including all of the Fortune 100, Schwartz said.

Yet despite operating a profitable and growing business, Schwartz and Articulate President Lucy Suros decided it was time for the company to finally raise some cash, pointing to a confluence of trends like remote work and the consumerization of the enterprise. It was less about the money and more about just having investors around the table who had seen growth before and knew the scaffolding needed to take it to the next level, Suros said.

"You don't generally go from high school sports to the pro leagues," Schwartz added. "This is in some ways like our college years. "

Its growth had already caught the eye of General Atlantic's Anton Levy, who had been close to the company for years. The growth equity firm led the investment alongside Blackstone and ICONIQ. The deal didn't include debt, but it is a mix of primary and secondary funding that values Articulate at $3.75 billion.

The company plans to use the cash to expand hiring and try to grow its sales both in the U.S. and internationally. It can also invest more aggressively in R&D, or, as Levy pointed out, consider M&A as a way to grow and scale.

"It's a great opportunity because those things haven't been done yet, simply for the fact he didn't have that kind of big large capital base around," Levy said. "So for us, it's an exciting opportunity to use capital strategically to flex a growth rate and really try to grow a platform."

Articulate wasn't the only giant series A. Just two weeks ago, General Atlantic announced a similar investment of $543 million in a series A round for Transmit, touted as the largest series A for a cybersecurity firm ever. The company similarly started out bootstrapped in 2014, before it started seeing the downsides of not taking venture money.

"We are in a highly competitive human capital race," Transmit co-founder Mickey Boodaei told Geektime. "Today, when we recruit, we're always compared to other companies that raised this and are valued at that. They often don't understand that unlike a company which has raised $100 million at a $500 million valuation, the bootstrap story we tell them offers so much more opportunity."

Others, like Perch's $775 million series A led by SoftBank, are combining an equity fundraise with debt. Perch is part of a new cohort of startups that are basically acting like PE shops and rolling up Amazon sellers. It needs a different level of cash to be able to continue to buy businesses compared to a SaaS company fundraise.

So is it right to consider these "series A" rounds if the companies are profitable operations that employ hundreds of people? As Levy points out, an IPO is called an IPO whether it's Facebook going public or a company doing $30 million in revenue. It still counts as a series A if it's the first institutional capital into a company.

"These are very, very special companies when you come across some of these companies that are proven business models growing at scale," Levy said. "They don't come around all that often."

Correction: An earlier version of this story misspelled Mickey Boodaei's name. This story was updated on July 1, 2021.


'The Wilds' is a must-watch guilty pleasure and more weekend recs

Don’t know what to do this weekend? We’ve got you covered.

Our favorite things this week.

Illustration: Protocol

The East Coast is getting a little preview of summer this weekend. If you want to stay indoors and beat the heat, we have a few suggestions this week to keep you entertained, like a new season of Amazon Prime’s guilty-pleasure show, “The Wilds,” a new game from Horizon Worlds that’s fun for everyone and a sneak peek from Adam Mosseri into what Instagram is thinking about Web3.

Keep Reading Show less
Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Sponsored Content

Why the digital transformation of industries is creating a more sustainable future

Qualcomm’s chief sustainability officer Angela Baker on how companies can view going “digital” as a way not only toward growth, as laid out in a recent report, but also toward establishing and meeting environmental, social and governance goals.

Three letters dominate business practice at present: ESG, or environmental, social and governance goals. The number of mentions of the environment in financial earnings has doubled in the last five years, according to GlobalData: 600,000 companies mentioned the term in their annual or quarterly results last year.

But meeting those ESG goals can be a challenge — one that businesses can’t and shouldn’t take lightly. Ahead of an exclusive fireside chat at Davos, Angela Baker, chief sustainability officer at Qualcomm, sat down with Protocol to speak about how best to achieve those targets and how Qualcomm thinks about its own sustainability strategy, net zero commitment, other ESG targets and more.

Keep Reading Show less
Chris Stokel-Walker

Chris Stokel-Walker is a freelance technology and culture journalist and author of "YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars." His work has been published in The New York Times, The Guardian and Wired.


Work expands to fill the time – but only if you let it

The former Todoist productivity expert drops time-blocking tips, lofi beats playlists for concentrating and other knowledge bombs.

“I do hope the productivity space as a whole is more intentional about pushing narratives that are about life versus just work.”

Photo: Courtesy of Fadeke Adegbuyi

Fadeke Adegbuyi knows how to dole out productivity advice. When she was a marketing manager at Doist, she taught users via blogs and newsletters about how to better organize their lives. Doist, the company behind to-do-list app Todoist and messaging app Twist, has pushed remote and asynchronous work for years. Adegbuyi’s job was to translate these ideas to the masses.

“We were thinking about asynchronous communication from a work point of view, of like: What is most effective for doing ambitious and awesome work, and also, what is most advantageous for living a life that feels balanced?” Adegbuyi said.

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.


It's OK to cry at work

Our comfort with crying at work has changed drastically over the past couple years. But experts said the hard part is helping workers get through the underlying mental health challenges.

Tech workers and workplace mental health experts said discussing emotions at work has become less taboo over the past couple years, but we’re still a ways away from completely normalizing the conversation — and adjusting policies accordingly.

Photo: Teerasak Ainkeaw / EyeEm via Getty Images

Everyone seems to be ugly crying on the internet these days. A new Snapchat filter makes people look like they’re breaking down on television, crying at celebratory occasions or crying when it sounds like they’re laughing. But one of the ways it's been used is weirdly cathartic: the workplace.

In one video, a creator posted a video of their co-worker merely sitting at a desk, presumably giggling or smiling, but the Snapchat tool gave them a pained look on their face. The video was captioned: “When you still have two hours left of your working day.” Another video showed someone asking their co-workers if they enjoy their job. Everyone said yes, but the filter indicated otherwise.

Keep Reading Show less
Sarah Roach

Sarah Roach is a news writer at Protocol (@sarahroach_) and contributes to Source Code. She is a recent graduate of George Washington University, where she studied journalism and mass communication and criminal justice. She previously worked for two years as editor in chief of her school's independent newspaper, The GW Hatchet.


Arm’s new CEO is planning the IPO it sought to avoid last year

Arm CEO Rene Haas told Protocol that Arm will be fine as a standalone company, as it focuses on efficient computing and giving customers a more finished product than a basic chip core design.

Rene Haas is taking Arm on a fresh trajectory.

Photo: Arm

The new path for Arm is beginning to come into focus.

Weeks after Nvidia’s $40 bid to acquire Arm from SoftBank collapsed, the appointment of Rene Haas to replace longtime chief executive Simon Segars has set the business on a fresh trajectory. Haas appears determined to shake up the company, with plans to lay off as much as 15% of the staff ahead of plans to take the company public once again by the end of March next year.

Keep Reading Show less
Max A. Cherney

Max A. Cherney is a senior reporter at Protocol covering the semiconductor industry. He has worked for Barron's magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.

Latest Stories