Cambridge-based Litmus raises $49 million to do quality control on e-mail campaigns

Litmus co-founders (from left) David Smalley, Paul Farnell, and Matthew Brindley.
Litmus co-founders (from left) David Smalley, Paul Farnell, and Matthew Brindley.

A little-known Cambridge company that performs quality checks on e-mail campaigns before you hit the “send” button is announcing a big round of funding this week. Litmus is banking $49 million from Spectrum Equity, a private equity firm with offices in Boston and San Francisco.

The company’s only outside funding before this? An £10,000 bank loan a decade ago, when the company was founded in London.

Litmus moved its headquarters to Cambridge in 2009, though one of the company’s three founders, David Smalley, remained in London to oversee Litmus’s European business. Since then, Litmus has grown to 40 employees, and CEO Paul Farnell says the new funding will allow it to bring on additional software developers, marketers, and customer support staffers.

Litmus’s customers pay the company a monthly fee to help assess e-mail marketing campaigns before they’re sent. Among the problems that Litmus can identify? “You can wind up in the spam folder instead of the inbox,” says Farnell. “Then, once your e-mail is being viewed, the images may not load correctly, or links may be broken. We’ve seen content dropping down to one tiny little column, where it’s impossible to read.” Subscriptions to the Litmus service start at $79 per month.

Pete Jensen, managing director of Spectrum Equity, says that his firm has been aware of Litmus for the past five years — but the company always rebuffed its offers of funding. “It’s very rare to be able to do what these guys have done with so little external capital,” Jensen says. “That really gets you focused on product, the community, and the user experience — and it pays great dividends over the long run.” Jensen says his firm has put money into other startups that bootstrapped for a long time, like SurveyMonkey and Lynda.com.

“I’m very confident that we’re going to create the next big innovation in e-mail,” says Farnell. “This capital allows us to do that.”

The company hosts two conferences a year on designing e-mails — one in Boston, and one in London.

Spectrum and Litmus celebrated the close of the funding round last night with a dinner at Menton, a French-Italian restaurant in Fort Point Channel.

Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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