Earlier this month, The Exchange took a look at quieter companies that have been growing consistently before, during, and after the 2021 venture capital peak. The startups and unicorns that didn’t raise at 50x or 100x ARR last year may be the companies most ready to kick open the IPO window at some point in the future.
Quite a number of you were enthused by the coverage of less-flashy private tech companies, so we’re taking another look at this startup cohort this morning.
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To further our conversation, I spoke with Derek Ting, the CEO of TextNow, which crossed $100 million in annual revenue — not merely in run-rate fashion — and has a very interesting venture capital history. We’ll also go over how to open the IPO window when the market stops falling by full percentage points every day.
Turning the clock back, you may recall that this column once had a regular series of posts looking at private companies that had reached the $100 million ARR threshold. We got bored of the topic after a number of cycles, as it turned out that most former startups that reached nine figures of revenue wound up looking and sounding rather like one another.
What’s TextNow and how’s it doing?
TextNow is a consumer phone and text service that offers a zero-cost service with advertising and various tiers that do not include ads. TechCrunch first covered the company back in 2011, when it raised around $1 million. The company has now raised around $1.5 million in total — that is not a typo; we did not mean to type billion.
The Exchange last mentioned TextNow last year when it reached a $100 million annual run-rate. Per the company, it closed out 2020 with $62 million in total revenue and $103 million in 2021. That puts TextNow on a far above the $100 million run-rate mark today, and as it has hired a CFO, is an IPO candidate as soon as the market welcomes such transactions again.
How did TextNow not need to raise several hundred million dollars?
We wanted to learn how TextNow had done what seems nearly impossible for most venture-backed companies — grow to public-market scale without the need to raise and spend tectonic sums of money. Per Ting, the answer is somewhat pedestrian. He said that TextNow focused on unit economics ahead of scaling, adding that the more that the company grew, the less it needed external capital.