Earlier this monthThe Exchange has looked at quieter companies that have grown consistently before, during and after the venture capital peak of 2021. The startups and unicorns that didn’t raise 50x or 100x ARR last year may be the most ready to take on a given open the IPO window at some point in the future.
Quite a few of you were excited about the coverage of less flashy private technology companies, so we’re taking another look at this startup cohort this morning.
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To continue our conversation, I spoke to Derek Ting, the CEO of TextNow, which exceeded $100 million in annual revenue — not just by run-rate — and has a very interesting venture capital history. We will also discuss how to open the IPO window when the market stops falling by full percentage points each day.
If you turn back the clock, you may recall that this column once had a regular series of posts about private companies reaching the $100 million ARR threshold. After several cycles, we got bored of the topic as it turned out that most of the former startups that hit nine figures ended up looking and quite similar.
At the time, we meant that as 99% compliment and 1% diss. Today it feels more like an utter tribute. Let’s talk about it.
What is TextNow and how is it doing?
TextNow is a consumer phone and SMS service that offers a free service with ads and different tiers that don’t contain ads. Marketingwithanoy first covered the company in 2011, when it raised approximately $1 million. The company has now raised about $1.5 million in total — that’s not a typo; we didn’t want to type billion†
The Exchange last mentioned TextNow last year when it hit an annual run rate of $100 million. According to the company, it closed out 2020 with total revenue of $62 million and $103 million in 2021. That places TextNow well above its $100 million run rate today, and since it hired a CFO, it will be as soon as possible. an IPO candidate as the market once again welcomes such trades.
How did TextNow not have to raise hundreds of millions of dollars?
We wanted to know how TextNow had done what seems almost impossible for most venture-backed companies: grow to the scale of the public market without the need to raise and spend tectonic sums of money. Per Ting, the answer is somewhat pedestrian. He said TextNow focused on the unit economy before scaling, adding that the more the company grew, the less outside capital was needed.