Squarespace shies from the public eye and goes private

Last month, Squarespace announced it is going private in US$6.9 billion takeover. It was acquired by Permira, a private equity firm based in the UK, in an all-cash deal.

If you haven’t heard of Squarespace before, it is a simple website builder used by almost 4 million subscribers. However, in a similar story to Facebook, it began as just a dorm room project back in 2003.

Here’s how the Founder, Anthony Casalena, “stumbled” upon a $6.9 billion business.

Here’s the story:

The Very Beginning

Squarespace’s story begins in 2003, when Casalena looked to create a blog that would allow him to easily share his thoughts and ideas, however that would prove quite difficult to do. Frustrated by the lack of user-friendly and integrated tools available for website creation, he decided to develop a platform that would simplify the process of building and managing websites.

While still in college, Casalena borrowed $30,000 from his father to buy computer servers to host the Squarespace code. For the first three years, Casalena ran Squarespace alone. He wrote the code, educated and interacted with customers, and managed marketing.

In the early days the growth was largely organic, driven by word-of-mouth from satisfied users, contributing to a steady increase in user base without significant marketing expenditures. At the time Squarespace was built for bloggers and they rode the wave of blogging becoming mainstream during the early 2000s.

However, by 2010, it had become a serious business, and their first round of external capital showed it. They raised a US$38.5 million Series A round, led by Accel Partners and Index Ventures. They now had capital for high-profile advertising campaigns such as Super Bowl commercials and partnerships with influencers and podcasters, which significantly boosted brand awareness and customer acquisition.

Over the next 8 years Squarespace continued to grow organically, however in 2019 they started pulling on the inorganic lever.

Supercharging growth

In 2019 Squarespace announced it’s first strategic acquisition of Acuity Scheduling, an online appointment scheduling platform, for US$50 million. The rationale was to integrate scheduling capabilities for businesses that rely on appointments, such as spas and consultancy services, providing a more comprehensive service for small businesses and entrepreneurs.

Around this time they also acquired Unfold, an app for creating engaging and aesthetically pleasing social media content. Acquiring Unfold allowed Squarespace to offer tools for managing and enhancing social media presence, catering to the growing demand for visually-driven marketing.

Two years later they acquired Tock, a reservation, table management, and event booking system for the hospitality industry, for US$400+ million.

Squarespace now had acquired a suite of tools, broadening its use case for businesses.

After strengthening their position in the market, Squarespace went public that same year at a US$6.6 billion market cap.

Squarespace is briefly public

At the time of the IPO Squarespace had grown 28% from the previous year, with 3.7 million subscribers driving $621m in annual revenue.

Despite being a well-known brand in website building and hosting, the company's valuation seemed high relative to its revenue and future potential. The market was cautious about paying a premium for a company facing stiff competition from other well-established players like Wix, Shopify, and WordPress.

And the initial market response reflected this concern.

On the first day of trading, the stock price dropped by about 13%, closing at approximately $43.65. This decline continued over the following week.

In the three years as a publicly listed company, Squarespace never climbed back up to the IPO valuation of $6.6 billion.

Here’s the Deal

Squarespace announced it will go private in a $6.9 billion all-cash transaction with Permira, a global private equity firm. This buyout values Squarespace shares at $44.00 each, representing a 15% premium over recent trading prices.

The decision to go private is part of a broader trend where several companies have chosen to de-list in response to market volatility and the challenges of maintaining public company status.

It will be interesting to see if Permira pursues restructuring or strengthens Squarespace's position against competitors through AI innovations.

Thanks for reading,

Archie Sampson, Founder of Prepped