US-based cloud note and storage app Evernote is raising up to $US100 million at a valuation of over $US1 billion, it has been reported.
According to Business Insider, Evernote has completed a new $US100 million round of financing, with “multiple sources” pointing to a $US1 billion valuation led by Meritech Capital Partners.
But TechCrunch has since reported the round has not closed, and the numbers may end up being different. Even so, Telsyte’s Sam Yip says a $US1 billion valuation isn’t that hard to comprehend.
“What we have here is a simple platform that already has 20 million users, and 750,000 of those are premium users. What we have here is success for the premium model,” Yip says.
“Mega valuations [are the result of companies being] able to solve consumers’ issues in a simple fashion. It’s similar to Instagram, which is just photo-sharing.”
“With Evernote, the existing platforms are out there, whether it’s desktop, smartphone or tablet. It just solves a simple task.”
To date, Evernote has raised $US95.5 million from angel investors and its Series A through D rounds, the latest of which was a $US50 million round in July 2011.
As stated by Yip, the app has 20 million users as of December 2011, across multiple platforms including Mac, Windows, iOS, Android, web browsers, BlackBerry and Windows Phone 7.
That user count is double what Evernote had in December 2010, showing strong momentum for the company, hence strong investor interest.
The product is sold on the freemium model – it’s free to use, although some features and capacity limits are raised for paying customers.
While it’s unsure what Evernote would do with the additional funding, competition in the note-taking space is accelerating. Apps like Catch are aiming to compete with Evernote.
Meanwhile, a Kickstarter project titled Scrawl 2 highlights what some see as a weakness in Evernote – a design that is starting to struggle under its growing list of features.
Evernote is also experimenting with other products, some of which come from acquisitions. It has launched a contact manager, a food tracker and a website readability enhancer.
It has also acquired graphics utility Skitch.
For other companies striving to become the next Instagram or Evernote, Yip stresses “simplicity is paramount”.
“It’s about looking for opportunities to simplify existing [issues] – whether that’s on the desktop, mobile devices, etc.”
“We’ll see some more [billion dollar valuations] in the next year, largely due to scale.”
“When you’re talking about millions of users across the world, even if they just pay a bit, it can add up to a billion [dollars]. It’s not confined to any particular geography – it’s global.”
According to Yip, there are plenty of opportunities yet to arise from the consumer cloud.
“A lot more people are putting their material in the consumer cloud and living in the cloud… The consumer cloud is becoming more relevant in our daily lives,” he says.
“There are a lot of opportunities in that consumer cloud for any sort of application that solves a simple consumer or business need. Nothing revolutionary – just note-taking in the cloud.”