Virtuous, a fundraising CRM for nonprofits, raises $100M from Susquehanna Growth Equity

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's just one of the 1.8 million nonprofits in the U.S. that need to continually solicit contributions from donors to maintain its services.

But Virtuous founder and CEO Gabe Cooper says that many charitable organizations are not very effective at marketing to their donors. "If you've ever given to a nonprofit before, what you probably got back was a piece of direct mail that felt like institutional nonsense that was disconnected from the reason you gave originally," he said. "Donors deserve a personal connection with the causes they care about most."

In 2014, that realization inspired Cooper to found Virtuous, a customer relationship management (CRM) and marketing platform that helps nonprofits increase donations. Since then, the Phoenix-based company has attracted more than 10,000 customers at various nonprofits, including Ronald McDonald House, Habitat for Humanity, and Arkansas Children’s Hospital, and has seen significant growth, quintupling its revenue in the last three years alone.

That rapid growth has piqued the interest of several growth equity investors who wanted to invest in the company. On Thursday, Virtuous announced that it raised $100 million from a single investor, Susquehanna Growth Equity, which is taking a minority position in the company.

Cooper said he didn't have plans on raising new funding this year, but several shifts in the industry, especially the integration of AI, have convinced him that this is an opportune time to have more capital.

Although Cooper declined to share Virtuous’ new valuation, he said that the revenue "valuation multiple was consistent with previous rounds." Since Virtuous' revenue grew 500% since it raised an $18 million Series B in July 2021, Cooper's statement about the multiple implies that valuation increased fivefold (an assumption that he declined to confirm).

While several companies offer CRMs for the nonprofit space, including a product from Salesforce, Cooper said the startup's main competitor is Blackbaud, a publicly traded company with revenues over $1 billion a year.

Cooper claims that Virtuous helps nonprofits understand the interests of their donors better than its competitors. The company achieves this by tracking email opens, website visits, and other data-driven analyses that Virtuous calls "responsive fundraising." Cooper added that the Virtuous approach to customer segmentation and marketing is similar to that of Klaviyo, but it's designed specifically for philanthropic fundraising.

By tailoring outreach to specific donors, Virtuous can increase the size of donations. "Our competitors don't do that. Their [approach] is very impersonal," Cooper said.

The new funding is being used to expand Virtuous' customer relationship team and, of course, to develop new AI functionality that it plans to make available to customers in early 2025.

Cooper said that new AI features are being tested internally, including natural language querying (that allow users to forgo tedious custom searches and report building). The new AI functionality was developed using the OpenAI platform "at a hackathon with the team at Microsoft," Cooper said.