I recently adopted a kitten from a local animal shelter. The modern, well-staffed, three-story facility relies almost entirely on donations to operate. It is just one of 1.8 million nonprofits in the United States that must continually ask for donations from donors to maintain services.
But Gabe Cooper, founder and CEO of Virtuous, says many charities aren’t very effective at marketing to their donors. “If you’ve ever donated to a nonprofit before, what you probably received was a direct mailer that felt like nonsense from an organization that had nothing to do with why you gave,” he says. “Donors deserve a personal connection with the causes they care about most.”
In 2014, Cooper’s realization led him to found Virtuous, a customer relationship management (CRM) and marketing platform that helps nonprofits increase their donations. Since then, the Phoenix-based company has grown significantly, reaching more than 10,000 customers across a variety of nonprofits, including Ronald McDonald House, Habitat for Humanity, and Arkansas Children’s Hospital, and has seen revenues grow fivefold in the past three years alone.
That rapid growth has caught the attention of several growth equity investors looking to invest in the company. On Thursday, Virtuous announced it had raised $100 million from a single investor, Susquehanna Growth Equity, which is taking a minority stake in the company.
Cooper said the company has no plans to raise new capital this year, but he believes now is a good time to raise more capital, especially given the many changes taking place in the industry, including the integration of AI.
Cooper declined to share Virtuous’s new valuation, but said its revenue “value multiple is consistent with prior rounds.” Since Virtuous’s revenue has grown 500% since it raised its $18 million Series B in July 2021, Cooper’s multiple statement implies a fivefold increase in valuation (an assumption he declined to confirm).
Cooper says several companies, including Salesforce, offer CRMs aimed at the nonprofit space, but the startup’s main competitor is Blackbaud, a publicly traded company with more than $1 billion in annual revenue.
Cooper claims Virtuous helps nonprofits understand their donors’ interests better than their competitors. The company does this by tracking email opens, website visits, and other data-driven analytics that Virtuous calls “responsive fundraising.” Cooper adds that Virtuous’s customer segmentation and marketing approach is similar to Klaviyo’s, but is specifically designed for charitable fundraising.
Virtuous can increase donation volume by tailoring its approach to specific donors. “Our competitors don’t do that. Their approach is very impersonal,” Cooper said.
The new funding will be used to expand Virtuous’s customer engagement team and develop new AI capabilities that are expected to be available to customers in early 2025.
Cooper said new AI features are being tested internally, including natural language queries (which would allow users to forgo tedious custom searches and report creation). The new AI features were developed using the OpenAI platform “at a hackathon with the Microsoft team,” Cooper said.
