Raleigh startup Levitate keeps up the growth despite the pandemic, raises $6M
Jesse Lipson, the founder of the fast-growing Raleigh startup Levitate, says the plan all along was to raise money this year — he just didn’t anticipate he would have to do it during a pandemic.
But in March, with uncertainty at its peak, Lipson decided to tap into his company’s existing investors to make sure it could continue its aggressive growth throughout 2020.
Despite the pandemic, customers have continued to flock to Levitate’s services, a software platform that helps small businesses keep in touch more effectively with their customers.
The startup competes with email service companies like Mailchimp by providing more intimate communication tools, like reminders to message a customer personally, notes on previous conversations and analytical breakdowns of outreach. The company also provides marketing coaches to offer strategic support.
In the past year, the company has seen its paying customer base triple to 1,000 customers, and its team at the new HQ Gateway coworking hub has grown to 80.
Levitate’s new $6 million round of funding, all from existing investors, aims to keep that growth going. The company has raised a total of $12 million since it was founded three years ago under the name Real Magic. Levitate is the first product to come out of Real Magic.
“I think that given what was happening with the pandemic in March and April, it felt like a good idea to accelerate (our conversations with investors),” Lipson said in an interview. “Having a really solid balance sheet gave us confidence to grow the business aggressively.”
The company’s investors include Tippet Venture Partners; Peter Gassner, the cofounder and CEO of Veeva Systems; and Durham-based Bull City Venture Partners.
Lipson has a history growing startups aggressively. His previous startup, ShareFile, grew to 50,000 customers after he sold it to Citrix for $54 million in 2011.
“We are very pleased to support Jes Lipson and his team as they scale Levitate,” said Andy Sheehan, managing partner of Tippet Venture Partners. “Levitate has exhibited superior execution in this time of extraordinary circumstances and continued to deliver outstanding value and critical functionality to customers.”
Lipson said because of the pandemic it didn’t make sense to try to build a rapport with new investors, so he decided to stick with the people he knew. He said the new funding should carry the business into next year, when in-person meetings might be possible again.
In some ways, the pandemic has actually highlighted the need for Levitate’s services, Lipson said. The company mainly focuses on small businesses that need to maintain contact with customers. Its top industries are real estate, finance and insurance, Lipson said.
“I think COVID is a reminder about the importance of keeping in touch, especially when other ways to keep in touch like getting coffee and going to conferences is gone,” Lipson said. “So what is left? Email, phone and text.”
With those forms of communication becoming even more important for the next six to 12 months, Lipson said, customers are looking for ways to improve their outreach.
He said he hopes to use the money to do more hiring. With its customer base growing so fast, he said, the company needs more people on its product development and sales teams.
Originally, the company thought it might have to move out of the HQ Gateway space at the end of the year, when it anticipates it will reach 100 employees. Levitate takes up about half of the Gateway coworking hub, Lipson said.
But because many employees are now working form home more, Lipson thinks they won’t have to find a larger space until sometime in 2021.
Lipson said it has been a lot easier to hire new employees now than it was six months ago. The incredibly tight labor market that existed before the coronavirus has loosened as many companies have had to downsize or slow their hiring goals.
When Levitate opened one position recently, it got more than 350 applications, something that would have been unheard of before the coronavirus. But a lot of applicants for sales positions have been coming from the services industries, which have taken the brunt of the pandemic’s toll.
“Six months ago the labor market was really tight,” he said. “We were successful recruiting, but we had to work really hard because we were hiring aggressively. There are a lot more people in the labor market right now.”
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published July 23, 2020 at 10:05 AM with the headline "Raleigh startup Levitate keeps up the growth despite the pandemic, raises $6M."
