One of the unsung heroes among Web startups is SurveyMonkey, the Portland-based company that offers online surveys. Today, it is announcing a very large round of senior debt financing: $100 million from a syndicate led by Bank of America Merrill Lynch and SunTrust Robinson Humphrey. Survey monkey never really took traditional venture capital. Last year, it raised an undisclosed sum from private equity firms Bain Capital Ventures and Sepctrum Equity Investors. The proceeds will be used to retire the company?s current debt and possibly for future acquisitions.
The service has been growing like a weed and currently 25 million people a month respond to those surveys. Most of those don?t pay, but Survey Monkey upsells customers to paid plans with more bells and whistles and which allows for more surveys. Earlier this year, it acquired Precision Polling, a phone survey startup.
SurveyMonkey is a very high margin business, with revenues rumored to be above $50 million a year. Basic surveys are free, but if customers want branded surveys or unlimited questions and responses, they have to pay up to $20 a month. It is a classic freemium business model. And it appears to be doing quite well based on the fact that SurveyMonkey went for debt financing, which is easier to do with strong cash-flow businesses.
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