How Twilio Might Raise their 50M Series D Round

It’s Clobbering Time!!

Twilio is a marketing juggernaut and probably the best developer evangelism organization in the valley (maybe the world). They have amazing documentation, a lot of great engineering talent and a business model that can scale. They have raised 33.5M and are now attempting to raise an additional 50M through a Series D Round. Here’s a list of some of the concerns and the benefits of giving Twilio this money:


  • What’s going on with Evan Cooke? Is he still the CTO? Evan is smart as a whip but it has to be scary that he’s on Sabbatical advising many startups all over the world instead of working on Twilio’s Pre-IPO Infrastructure.
  • Selling SaaS Applications into Enterprise and Big Telco is hard. Whatever happened to the AT&T deal? As far as I can tell that’s dead in the water.
  • Competition is fierce from companies like Voxeo. Telecom is a cut-throat market and there’s a question of how long Twilio can maintain their excellent margins.


  • Twilio has a TON of developers and they love Twilio. You can’t buy that kind of attention. They clearly have a vision on how to work with Developers and they do it extremely well.
  • Twilio is big. They have a lot of employees, they move a lot of widgets; they are definitely a much more serious company than they were 2 years ago. They even hired that awesome dude from Salesforce to turn up the heat on revenue.
  • They have proven their Thesis: Telecom Services must be exposed via API. This is perhaps the most important point.

So should Fred and Union Square pay Jeff the money?

It’s a very tough question. From a financial perspective, Twilio would likely need to exit at between 400 and 600M for this to be worth it. I expect that after four rounds the dilution that the founders have experienced is severe, but that’s to be expected for a late stage company. From a scaling perspective, they need to identify new markets and attack them aggressively. If I were in Twilio’s shoes, here’s what I would do:

Step 1) Rock the Enterprise. Twilio has to find a way to own the Enterprise. The SIP out stuff is definitely a step in the right direction but frankly Tropo from Voxeo still has them beat in terms of feature depth. Twilio is a lot easier to work with when compared to the offerings from Voxeo; the APIs are easier to consume and while that used to be irrelevant to the Enterprise, the trend of Enterprise Consumerization really favors Twilio’s simplicity. I’d hammer this. It’s tough to compete with Voxeo because they have a great suite of products, but I’d say Twilio has the edge in terms of integration ease. What Twilio really needs to do here is find a way to go inside the corporate firewall. It’s a hard problem, but that’s how they can hit the kinds of compliance Enterprises need.

Step 2) Crush International. Look, I work in Telecom, I know International is really hard, but Twilio actually has a very robust offering here. To IPO, growth opportunities need to be rampant. Some partnerships to extend functionality in Asia would be incredibly valuable. Leading the conversation in this direction would be advisable.

Step 3) Take money from a Telecom VC. Twilio needs a strong Carrier partner. Taking money from a Telco VC would signal that the Twilio team is serious about going into telecom and working with the big Carriers (as opposed to trying to strangle them in their sleep). There’s definitely a lot of confusion within the Carrier ranks about how Twilio is going to partner with them; signaling a willingness to work with Carriers by taking money from a telecom VC indicates another robust growth market.

So should Fred and company pay Jeff? If Twilio can be sold for 500M+ or IPO with revenues in excess of 40M per year, I would think paying them would be a no-brainer. If Twilio is not going to hit 40M in revenue next year, the question becomes more murky. I tend to think a private sale for a SaaS company would be at 8-13x revenue (much lower multiples for Consulting companies, higher multiples for advertising companies. Basically a question of margin) and an IPO could really be any multiple (IPO pricing varies with the tea leaves).

Honestly, with the Tumblr acquisition, I’m not sure how anything works in the valley any more.

What do?

I think very highly of Jeff and the Twilio team. I tend to think they’ll be successful in raising this money, not only because they’ve got a pattern of success but because they have to do it. There are obviously some hurdles but any good story is not without its difficulties.