(Bloomberg) — For years, Squarespace Inc. has been a leader in the old-school art of designing websites. Its main rival, Wix.com Ltd., has been public since 2013, but Squarespace remains private.
Now in its teenage years, Squarespace is giving early employees and investors a way to cash out. The New York-based company said General Atlantic LLC, an investment firm and Squarespace backer, is injecting a new round of funding, most of which will go toward buying stock from other investors and employees.
General Atlantic will commit about $200 million to the deal, and the new shares value the business at $1.7 billion, said a person with knowledge of the deal. Squarespace Chief Executive Officer Anthony Casalena declined to comment on terms of the funding.
As many technology companies postpone initial public offerings indefinitely, early backers are getting restless. The Bloomberg U.S. Startups Barometer, an index tracking the private technology industry, shows IPOs and acquisitions are at a three-year low. More startups are arranging deals similar to Squarespace’s to appease shareholders. Uber Technologies Inc. recently offered stockholders the option to sell to a group of investors led by SoftBank Group Corp. at a 30 percent discount to the most recent valuation. At least two high-profile backers have already agreed to participate.
Unlike Uber, Squarespace is profitable. “If anything, we actually would have been interested in buying more,” Anton Levy, managing director and head of internet and technology at General Atlantic, said in an interview. “Even people that were early investors that have made a fabulous return sold a small percentage.”
Revenue in the past year increased 50 percent to about $300 million, Casalena said. Squarespace isn’t far behind Wix, which is expected to generate about $424 million this year. The Squarespace brand has gained recognition among consumers for its ubiquitous podcast ads and a Super Bowl commercial featuring John Malkovich.
But Casalena suggested Squarespace has more to do before a potential IPO. He said the company is focused on helping customers sell products through their sites. This effort puts Squarespace more directly in competition with Bigcommerce Inc., Etsy Inc., Shopify Inc. and, most terrifyingly, Amazon.com Inc. “It’s the most requested feature on the platform right now,” Casalena said. “A lot of people are there building a brand. They want to sell something.”
Its broad customer base, which includes wedding photographers to family-run pizza parlors, gives Squarespace a unique group of people to grow its commerce products into, whereas a company like Shopify is focused on online-only e-commerce sites that sell physical goods, Casalena said.
The funding round is a milestone for the 13-year-old business and its 700 employees, Casalena said. It brings Squarespace into the realm of Buzzfeed Inc. and Reddit Inc., both with similar valuations, according to research firm CB Insights. “We’ve been a little under the radar for a lot of people,” Casalena said.
The next stage of growth is to build into more international markets like France and Germany, he said. Right now, around 30 percent of the company’s business is outside the U.S.
Analysts and bankers have been expecting the company to go public since at least 2016. Casalena declined to comment on IPO plans but said he’s building a company capable of doing so. “We want to do this on our own time table,” he said. “We’re not in a rush.”