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VC Firms see Signpost Pointing to Growth

By Small Business FOXBusiness

Some major venture capitalist investors are following the Signpost towards an area of expected growth—helping smaller businesses manage and grow their customer base.

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New York-based Signpost announced today it has raised $20.5 million in a Series C round of financing led by Toronto-based Georgian Partners along with Spark Capital, OpenView Venture Partners, Scout Ventures, and the Launch Fund.

While Google Ventures did not take part in this round, it is an early investor in Signpost, which has now raised $37.5 million.

“Twenty and a half million dollars really puts Signpost on the map,” said Peter Krasilovsky, chief analyst and vice president at BIA/Kelsey, adding, “It should allow Signpost to aggressively go after a target market of six million smaller business in the U.S.”

That is exactly what Signpost founder and CEO Stuart Wall told Fox Business he intends to do. Wall says technology can help level the playing field for small businesses taking on behemoths. “An independent, small business has limited information relative to Fortune 500 businesses…Signpost provides the sort of context-dependent marketing that was previously only available to the Starbucks of the world.”

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Signpost’s customer relationship management (CRM) software platform tracks all interactions from phone, email, credit card transactions, and social media reviews between consumer-facing enterprises and their customers. The company targets smaller firms that may not have the time or tech savvy to create their own applied analytics system.

Wall says his firm can automate these functions to save time and hassle for small business operators. “If a business owner had the time to get up and running on Unbounce (landing page optimization), Google Analytics, MailChimp (non-targeted email mail merging) and track the touch points between all of these across a larger CRM, they would be approaching what we can accomplish automatically on a merchant’s behalf (and) it would take them days to set up and require several hours each day to maintain.”

BIA/Kelsey estimates these automated marketing solutions will become a growing part of a $50 billion industry in the next few years as cloud software expands.

But that doesn’t guarantee the smaller segment of the market will grow as quickly as the larger firms’ spend. BIA/Kelsey’s Krasilovsky says it’s not a given that smaller businesses want to focus on CRM marketing and build these types of programs.

The analyst is upbeat about Signpost’s prospects but says it’s not a slam dunk to succeed, “Smaller businesses aren’t generally very focused on sophisticated marketing and they don’t often pick up the ball to engage in these types of activities.”

And of course, competition could ramp up. Square, Google, and Intuit have all entered the space. Krasilovsky says Facebook may compete with Signpost for some local spend but they are not direct competitors, just another marketing avenue (BIA/Kelsey found small businesses typically use seven or eight channels for marketing) along with ValPak, Yellow Pages, social media programs or Groupon.

Signpost Up Ahead, Next Stop—The IPO Zone?

While Signpost’s Wall wouldn’t share revenue or profit numbers, he claims the privately-held firm earns “healthy margins” on its software product and provides what he calls a “substantial return on investment” for clients on their subscription fee.

He did note their more than 10,000 subscribers average more than 800 customers per location.  And the CEO claims his company’s platform adds “another 10%, on average.”

Wall says the clients base ranges from a “single dentist to a national rental car franchise. Our largest client has over 500 locations.”

So will the fast-growing company end up giving its investors a liquidity event? Wall dodged the IPO question, noting only that Signpost is on its way to becoming a billion dollar company.

The analyst Krasilovsky weighed in saying IPO talk is premature, but he did say a Google or Facebook may potentially buy Signpost if the company successfully expands interest among small businesses in CRM software: “If Signpost’s emphasis on CRM proves to be a new way for smaller businesses to understand their customers and market themselves, it could have a homerun.”

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