Brainshark: IPO or Acquisition Target?

As part of my sales 2.0 case studies, I introduced Brainshark, a provider of an SaaS platform that helps organizations create, narrate, share, and track online multimedia presentations. Analysts expect that Brainshark may now be deciding whether to start an IPO process. Let’s take a look at how the business has fared so far.

Brainshark’s Model
Waltham, Massachusetts–based Brainshark was founded in 1999 by current CEO Joe Gustafson with a vision to transform the way organizations created and shared content. The company wanted to simplify the process of using multimedia technology by enabling organizations of all levels to create an interactive presentation that included both audio and visual media. To cater to the growing mobile device market, Brainshark also has mobile apps available for Android- and iOS-based devices.

Today Brainshark caters to a third of the Fortune 100 companies and more than a thousand mid-sized and small businesses. Some of the big names include Wells Fargo, American Express, Aetna, and SAP, to name a few. They cater to industries spanning banking, insurance, pharmaceutical & life sciences, healthcare, technology & telecommunications, non-profit & education, and retail. Brainshark claims that it helps create on-demand video presentations every three minutes and that these presentations are viewed every 2.5 seconds.

Brainshark charges customers a software license fee in return for their being able to access the company’s proprietary tools to create, manage, and share presentations. It lets individuals sign up for its tools free and gives them a very basic set of tools to edit and manage presentations. For individual sales or marketing professionals, it offers additional features and upgrades at an additional monthly fee, which ranges from $9.99 to $19.99 depending on the nature of services required. Enterprise customers are charged a higher rate and analysts estimate that the average bill rate for an enterprise is $50,000 a year.

Since inception, Brainshark has raised $23 million in venture capital funding. Its financials are not publicly disclosed, but it is a profit-earning organization. When I interviewed Dave Fitzgerald, EVP of sales and marketing, in September 2010, Brainshark was operating at an annual revenue rate of $30 million-$32 million. Market reports suggest that revenues in 2010 grew 34% over the year. The company claims to have more than 1,800 customers, and an average bill rate of $50,000 per enterprise. It should be looking at revenues of close to $75 million in 2012. If the company goes public in 2013, a revenue run-rate of close to $100 million is feasible.

Brainshark’s Expanding Offerings
Besides offering platform and SaaS tools, Brainshark also helps businesses by conducting training under its professional services program. Recently, it expanded its training sessions to include email marketing best practices workshops. The four-hour workshops on email marketing best practices aim to make businesses more knowledge about creating higher-impact, higher-reach, and more traceable email marketing campaigns. These workshops will be provided on-site and on-demand, and will be accessible to enterprise customers at a charge.

In addition, it launched a rapid results e-marketing program that will combine e-marketing campaign services with a limited license of the Brainshark solution for a specific campaign. Brainshark consultants will help create and track content, optimize response through testing, distribute the campaign, and track results. This service should help organizations increase marketing response rates by delivering high-impact, highly traceable campaigns in a short amount of time.

Brainshark recently announced its tie-up with Blackboard Learn for Sales, a cloud-based learning management solution focused on sales training and professional development. The partnership will help users improve the effectiveness and speed of the creation and deployment of sales training content. Salesforce users using Blackboard Learn for Sales will now be able to instantly deploy Brainshark and create courses that can be viewed on-demand, on any device.

It’s interesting to see a large crop of SaaS companies in the $75-$100 million bracket getting ready to go public in 2013. If the IPO market window remains open – that is, some macro economic factor doesn’t shut it close, we will likely see a strong set of SaaS IPOs. In 2012, of course, we’ve also seen some large SaaS acquisitions, including most recently Yammer. Acquisitions, of course, will continue in 2013, so some of this IPO prospects may also get scooped up along the way by the Oracle–SAP–Microsoft–Salesforce.com types.