I recently adopted a kitten from my local animal shelter. The modern, well-staffed, three-story facility relies largely on donations to operate. It's just one of 1.8 million nonprofits in the U.S. that require ongoing donations from donors to maintain their services.
But Gabe Cooper, founder and CEO of Virtuous, says many charities don't market to donors very effectively. “If you've ever given to a nonprofit, what you've probably gotten in return was direct mail that felt like institutional nonsense that had nothing to do with the purpose you gave to in the first place,” he says. “Donors have a right to be personally connected to the causes they care about most.”
That realization prompted Cooper to found Virtuous, a customer relationship management (CRM) and marketing platform that helps nonprofits increase donations, in 2014. Since then, the Phoenix-based company has experienced significant growth, adding more than 10,000 customers across a range of nonprofits, including Ronald McDonald House, Habitat for Humanity and Arkansas Children's Hospital, and seeing revenue increase fivefold in the past three years alone.
That rapid growth has attracted the interest of several growth investors looking to invest in the company: On Thursday, Virtuous announced it had raised $100 million from a single investor, Susquehanna Growth Equity, which will take a minority stake in the company.
Cooper said the company has no plans to raise new capital this year, but some changes in the industry, particularly the integration of AI, have convinced it now is a good time to raise more capital.
Cooper declined to disclose Virtuous's new valuation but said the “valuation multiple is consistent with previous rounds” of revenue. Virtuous's revenue has grown 500% since it raised $18 million in Series B in July 2021, so Cooper's comments about the multiple suggest the valuation has increased five times (he declined to confirm this assumption).
There are several companies offering CRM for the nonprofit sector, including Salesforce's product, but Cooper said the startup's main competitor is Blackbaud, a publicly traded company with more than $1 billion in annual revenue.
Cooper claims that Virtuous helps nonprofits understand donor interests better than its competitors. The company does this by tracking email opens, website visits, and other data-driven analytics that it calls “responsive fundraising.” Cooper adds that Virtuous's approach to customer segmentation and marketing is similar to Klaviyo's, but designed specifically for charitable fundraising.
By tailoring outreach to specific donors, Virtuous is able to increase donation amounts. “Our competitors don't do that. [approach] “It's very impersonal,” Cooper said.
The new funding will be used to expand Virtuous's customer relations team and, of course, develop new AI capabilities that it plans to offer to clients in early 2025.
Cooper said the new AI capabilities, including natural language querying (which saves users from tedious custom searches and report building), are being tested internally. The new AI capabilities were developed using the OpenAI platform “in a hackathon with a team from Microsoft,” Cooper said.