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Website builder Webflow hits $4 billion valuation as it nears $100 million in revenue

Vlad Magdalin says he’s received some weird looks at Starbucks in recent weeks when he tells baristas his first name. But he has no reservations about the war in Ukraine initiated by the one who bears that name – on the day the invasion began, Magdalin renounced his dual Russian citizenship. Webflow, the website creation startup of which he is the CEO, no longer does business in Russia. A number of Ukrainian relief efforts have also been launched using its “no code” tool which allows anyone to create a professional website without having any coding skills.

It is in this “surreal” setting that Magdalin, of half-Ukrainian, half-Russian origin, announces a new fundraiser for his company. “You kind of have to give yourself permission to hold both realities,” he says. Webflow said on Wednesday it raised $120 million in a Series C funding round led by Y Combinator Continuity, with participation from existing investors including CapitalG and Accel. The round brings the San Francisco-based startup’s valuation to $4 billion and comes as it is on track to hit $100 million in annual recurring revenue within a month.

Webflow was founded in 2012 by Magdalin and her brother Sergie, religious refugees who left Russia as children, and their friend Bryant Chou. After narrowly avoiding bankruptcy in its early days, the company capitalized on the growing buzz of “no-code” software and was accepted into Y Combinator’s accelerator. But after taking on $2.9 million in seed funding in 2014, the trio opted to hunker down and start the business until it became self-sustaining. “I was freaked out about venture capital coming in and destroying businesses,” says Magdalin, who in 2019 drove Webflow to profitability and more than $10 million in annualized revenue.

When he raised his Series A round that year, Magdalin crafted what he calls “a social contract” that any potential investor had to agree to in order for them to accept their money. It states in writing that they must commit to putting Webflow’s mission and its employees ahead of its revenue. “Sometimes I would share this thing with investors upfront and never hear from them again,” Magdalin says. Those who accepted are beginning to see the fruits of their condemnation. Webflow now has over 200,000 customers and is starting to see new revenue streams from the bets it made years ago – investing in things that don’t generate revenue right away is a fundamental principle of mission of which Magdalin speaks in his contract. An example is a tool for users to create animations. While the feature isn’t a necessity for most people starting a website, Magdalin says that over time, Webflow has seen an increase in new customers discovering it through animations, which include a badge. titled “Made in Webflow”. The startup is also starting to see accelerated growth in its sales business to companies like Univision and PwC. Over the past year, revenue from this segment has grown from about $1 million to $8 million, Magdalin said.

The new funding will go towards more product development on long-term betting, Magdalin said. He sees Webflow becoming in two to three years a “no-code” tool not only for building websites, but also software applications. “We want to turn any knowledge worker into a potential developer to develop software, but they don’t have to know how to write code to do it,” Magdalin explains. “Websites are our beachhead to expand into this larger space.”

Webflow is also setting aside $10 million from the new round of grants for users creating resources or hosting events to help others use Webflow. The company now has 400 employees and $335 million in total capital raised; enough money from past funding rounds is still in the bank, Magdalin says, to keep the company self-financing for at least four years. In the event of a prolonged market downturn, the new capital can help Webflow survive or strengthen through corporate acquisitions, says Rowghani, who joins the board as part of the raise. Magdalin says there are no plans to take the company public anytime soon, and his new investor says he shouldn’t feel pressure to rush in despite rivals like website builder Wix and e-commerce company Shopify are already public. “There are some companies where they get huge just because the [total addressable market] is huge,” says Rowghani. “One of the advantages of this market is that we don’t have to worry about competition.”