HipChat raises $100k in an atypical way

Bambi Francisco Roizen · August 10, 2010 · Short URL: https://vator.tv/n/1112

Meebo founders place $50k bet into the instant messaging startup while Founders Fund matches

Staying lean and forgoing fundraising are popular approaches to starting companies these days. In keeping with that philosophy, HipChat, a provider of instant messaging for small businesses, has opted to avoid Sand Hill Road and focus on getting to profitability.

The seven-month-old startup, however, did take some funds, as the recipient of a program started by blue-chip VC firm Founders Fund last year.

HipChat took in $100,000, thanks to the TechFellow Awards program. The program entrusts $25,000 to entrepreneurs and innovators in the high-tech industry to either invest in a new startup or a startup of their own. HipChat was the beneficiary of $25,000 from both Sandy Jen and Elaine Wherry, both co-founders of instant messaging company, Meebo, and TechFellow Awards recipients.

As part of the TechFellow program, Founders Fund also reserves the right to co-invest another $250,000 with their TechFellow recipients.

Founders Fund went ahead and co-invested $50,000, bringing the total amount invested in HipChat to $100,000. The structure is a convertible debt, meaning the angel investors and the Founders Fund can invest in HipChat’s Series A round at a discount.

What makes HipChat interesting? Besides its novel approach to receiving investment dollars, it's trying to make instant messaging a more secure environment for corporations. It doesn’t make sense that most corporations provide employees with a corporate email, and a public IM, such as AOL or Yahoo Instant messaging. These are consumer products with very little security and functionality that corporations need, said Pete Curley, co-founder, who came from Plaxo, through an acquisition of his former company, HipCal. 

HipChat is targeting the small- to medium-sized businesses. “50 is our sweet spot,” said Pete, explaining that HipChat is far more affordable than the $150 per user, per month price points that Microsoft Communicator and Lotus Sametime charge.

And while there are relatively decent “free” versions offered by, say Skype, HipChat’s service at $1 per user, per month, seems relatively reasonable for startups that collaborate on IM. For instance, a person can share a document with everyone on an IM conference call. All parties can see the document vs. just one. 


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Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

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HipChat is a private instant messaging and group chat service for companies that saves you from the distractions of today’s workplace: pointless meetings, long email threads, and the dreaded “tap on the shoulder.” Using HipChat, you can share text, code and files in a private setting for instant collaboration and decision making. Founded in 2009, HipChat was started by the guys who created HipCal which was acquired by Plaxo. For more information about HipChat or to give HipChat a try, check out www.hipchat.com.


Pete Curley

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