We have identified another Boston-area tech company that has hinted at ambitions to go public.
Cambridge-based EverQuote on Thursday announced it has raised a $23 million Series B round to expand its online insurance marketplace and to give its founders and early employees some liquidity as part of a pre-IPO strategy.
Founded in 2010, EverQuote provides a data-driven auto insurance marketplace — or as the company calls it, a “personal risk marketplace” — and it has reached over $100 million in annual revenue, as well as profitability, with very little outside funding. Prior to the Series B, the company had only raised about $3 million, making it a pretty capital-efficient endeavor. EverQuote made this year’s Inc. 5000 list of fastest-growing private companies, with a three-year growth rate of 208 percent.
The round was led by Maryland-based Savano Capital Partners, with participation from Stratim Capital, Oceanic Partners and T Capital Partners.
Seth Birnbaum, Everquote’s CEO and co-founder told BostInno the funding round will be used to expand product development and sales. More specifically, it plans to add 120 people — evenly split between sales and data scientists and engineers — to its current headcount of 185. The company is also planning to open a sales office in Woburn, Mass.
“We have a roadmap to get to $1 billion in revenue and that’s what we’re focused on doing.”
The Series B will also be used to provide some liquidity to founders and early employees as part of what Birnbaum said is the company’s “pre-IPO strategy.” He declined to discuss any further the company’s IPO plans, but he said by providing some liquidity, it can help employees “continue to make progress in their personal lives while building the business for the long term.” He said providing some liquidity can also remove some pressure for a company to go public sooner.
“We really want to build a big company here,” Birnbaum, who previously founded and led the cybersecurity company now known as Digital Guardian, said. “We have a roadmap to get to $1 billion in revenue and that’s what we’re focused on doing.”
If EverQuote does eventually decide to go public, the company will be equipped with a general counsel and CFO who have previous experience of taking companies through an IPO. Dave Mason was previously deputy general counsel at Kayak when the company went public in 2011 and John “Wags” Wagner was vice president of finance at Carbonite when it went public the same year (Wagner also served as controller at Constant Contact from 2006 to 2011).
EverQuote makes its money through referrals on its online insurance marketplace, which has over 70 carriers — including All State, Liberty Mutual and Progressive — and more than 5,000 agencies. Its value proposition is that it’s able to match insurers with customers who fit the right risk profile because not all insurers are looking for the same kinds of customers. Birnbaum said that means it can drive down customer acquisition costs while increasing the value of the customer base.
The company is taking its offerings for insurers a step further with a safe driving app it released earlier this year called EverDrive. Similar to the city of Boston’s new app, EverDrive uses a smartphone’s sensors to detect if the driver is driving too fast, taking sharp turns, braking too harshly or engaging in other kinds of unsafe behavior. At the end of each driving session, the app gives the driver an overall score based on those factors so the driver knows how he or she can improve.
Tomas Revesz, EverQuote’s CTO and co-founder, said the goal is to eventually let people buy insurance through EverQuote to receive discounts on premiums if they agree to share their EverDrive data with insurers. The company is expected to start offering this option with some insurers in the first quarter of next year.