Boise-based email service provider and creator platform ConvertKit looked at a sale to podcasting giant Spotify, but ultimately passed on doing a deal.
A blog post from ConvertKit founder Nathan Barry revealed the interest from the Swedish company best known for music streaming and podcasts. Barry founded ConvertKit in 2013, growing it into a large player in email marketing, with a focus on creators.
“After quite a bit of journaling I decided I didn’t want to sell and recommitted to the long-term vision,” Barry wrote. “Our mission to serve creators is more important to me than the return from an acquisition, even to a company as cool as Spotify.”
Spotify has grabbed headlines in recent weeks related to podcaster Joe Rogan, who Spotify pays to produce his Joe Rogan Experience podcast for the platform. Rogan’s comments on COVID-19 and past use of the n-word caught flack and boycotts from others in the entertainment industry.
But, Barry said the decision not to sell “frustrated” members of the ConvertKit team who hoped a sale would allow them to monetize their stakes in the company.
Instead, the company chose to take on investors through a different route, after Dharmesh Shah, co-founder, and CTO of customer retention management software company HubSpot offered to buy up to $1 million in privately held shares in ConvertKit.
“(Shah) heard Sam Parr and I (sic) talking on my podcast about the problem of liquidity for team members in privately held companies,” he wrote. “He offered to buy $1M worth of shares from any team member who wanted to sell in a secondary transaction.”
ConvertKit created a so-called special purpose vehicle that allowed employees to cash out equity they’d been granted, without changing control or selling the company.
“That made the process so easy and allowed us to take checks ranging from $2.5 million all the way down $10,000—so long as each person was an accredited investor,” Barry wrote.
ConvertKit sold a total of 3.2% of its shares to “friends of ConvertKit.” Barry said the transaction values ConvertKit at $200 million. The move keeps Barry in control and the company independent, while giving employees a way to cash out some equity.