Recently, I took a step towards becoming a pet parent by adopting a kitten from a neighborhood animal shelter. This three-story state-of-the-art facility, which operates primarily on public donations, is one of the staggering 1.8 million non-profit organizations in the US. These organizations heavily rely on donor contributions to keep their services running smoothly.
According to Gabe Cooper, the founder and CEO of Virtuous, a lot of philanthropic organizations do not excel at effectively marketing to their donors. He says that most donors receive impersonal and irrelevant direct mail after their donation, which does not resonate with the initial reason they chose to donate. Cooper firmly believes that donors should have a personal connection with the causes they are passionate about.
This understanding led Cooper to establish Virtuous in 2014, a Customer Relationship Management (CRM) and marketing platform designed to aid non-profits in boosting their donations. Since its inception, the Phoenix-based company has successfully catered to over 10,000 customers from various non-profits, including Ronald McDonald House, Habitat for Humanity, and Arkansas Children’s Hospital. The company has experienced substantial growth, multiplying its revenue five times in the last three years.
This impressive growth has captured the attention of numerous growth equity investors, leading to a substantial investment of $100 million from Susquehanna Growth Equity, who now holds a minority position in the company. While Cooper had no immediate plans for new funding, the integration of AI and other industry changes convinced him to seize this opportune moment to secure more capital.
Although Cooper refrained from disclosing Virtuous’ new valuation, he indicated that the revenue valuation multiple was in line with previous rounds. Given that Virtuous’ revenue skyrocketed by 500% after raising an $18 million Series B in July 2021, it’s safe to assume that the company’s valuation has increased substantially, though Cooper declined to verify this.
Virtuous faces competition from several companies offering CRMs for non-profits, including Salesforce and its main competitor, Blackbaud, a publicly listed company with annual revenues exceeding $1 billion.
However, Cooper asserts that Virtuous outperforms its competitors by helping non-profits better understand their donors. This is achieved by monitoring email opens, website visits, and implementing data-driven strategies that Virtuous terms as “responsive fundraising.” Virtuous’ customer segmentation and marketing approach, similar to Klaviyo, is tailored specifically for philanthropic fundraising.
By customizing outreach to individual donors, Virtuous can enhance the size of donations. Cooper emphasizes that their competitors lack this personal touch.
The fresh funding will be used to grow Virtuous’ customer relationship team and to fund the development of new AI features, which are expected to be available to customers by early 2025. Cooper revealed that these new AI features, including natural language querying, are currently being tested internally. The AI functionality was developed using the OpenAI platform, in collaboration with the team at Microsoft, during a hackathon.
