Months after GoFundMe shut down its charity website, the crowdfunding platform is getting back into the fundraising game, agreeing to acquire San Diego-based Classy in an all-equity deal. Additional terms of the transaction were not disclosed.
It is the third announcement of the sale of a major engagement platform in 10 days, following Blackbaud’s acquisition of corporate social impact firm EVERFI, and Network for Good being purchased by the parent investment umbrella that owns EveryAction, Social Solutions and CyberGrants. Combined revenue of all the combined firms, according to industry experts, exceeds $4 billion.
GoFundMe signed a definitive agreement on Jan. 6 and the deal is expected to close in the first quarter of 2022, subject to regulatory approvals and other customary closing conditions.
In 2021, $1.1 billion was raised by nonprofits on the Classy platform, bringing total all-time donations to nearly $4 billion. More than $15 billion has been raised on GoFundMe from 200 million donations since it was founded in 2010.
Both companies started in San Diego about 10 years ago. GoFundMe has approximately 400 employees and Classy has 330, with no plans to downsize or eliminate positions. Classy will be a subsidiary of GoFundMe and the two companies will continue to operate as separate entities under GoFundMe CEO Tim Cadogan. Chris Himes will remain CEO of Classy, reporting to Cadogan.
As part of Series D funding announced in April 2021, co-founder and CEO Scot Chisholm transitioned into a full-time role as executive chairman, leading mergers and acquisitions and new market expansion. Himes, a longtime board member and chief operating officer, took over as CEO.
Chisholm’s transition led to the October acquisition of Fondi, a hybrid events platform, Himes said, but the GoFundMe deal grew out of discussions between the two CEOs. Himes and Cardogan talked about “expansive partnership opportunities, and something deeper emerged.” Discussions built momentum in the summer, according to Himes, reaching their highest levels, including the boards, three to four months ago.
The Series D funding — almost two times what Classy had raised in previous rounds combined — aimed to accelerate product development, double the size of its product and engineering organization during the next two years, and enter into new markets like corporate giving. The investment resulted in the acquisition of Fondi, according to Himes, and 16 major product and feature releases.
“We weren’t looking to sell the company,” Himes said. “We’d just raised a lot of money and had a clear Plan A for market leadership. The donor acquisition and reach strategy for Classy became too exciting to really postpone. We decided it was a really good time to try to change the space completely,” he said. “One of things that round of funding gave us was the confidence and resources to only do a deal if we were overwhelmed with its attractiveness, especially from a vision perspective.”
GoFundMe launched a free, fundraising suite for nonprofits in 2019, following up on its acquisition of CrowdRise in 2017, before shutting down the platform a year ago. The platform ended support for third-party integrations and the public Application Programming Interface (API) after March 31, 2021. Charities had until this past Dec. 31 to view and export donor and fundraiser data and content from GoFundMe Charity.
The GoFundMe acquisition is “an entirely growth deal,” Himes said, with no end-of-life or forced migration of products.
Classy has a relationship with the Leukemia & Lymphoma Society (LLS) and there are some 44,000 leukemia-related campaigns on GoFundMe. “When you think of the number of fundraisers and donors and the extended community that has leveraged GoFundMe just for that cause, for instance, how many of those people does LLS have a relationship with? Are there introductions to be made that both sides would be delighted with? We think so,” Himes said.
To date, Classy has raised almost $184 million from investors. After seed and Series A funding rounds from angel investors in 2010 and 2012, respectively, Classy raised about $65.5 million in three subsequent rounds of funding, according to Crunchbase:
- Private equity, 2019 – $17.5 million
- Series C, 2016 – $30 million
- Series B, 2015 – $18 million
Classy counts more than 6,000 nonprofits as customers. Its fundraising suite includes crowdfunding, peer-to-peer fundraising, online donations and event management. Almost 20% of total giving on the platform comes from donors who subscribe to nonprofits and pledge to give on a regular basis.
At the time of the Series D investment, Classy also announced plans to reincorporate as a Public Benefit Corporation, accelerating the timeline it initially put forth after becoming a certified B Corp in December 2020.
“The philanthropic market is about $500 billion annually in the U.S. alone and right now, online giving is a small fraction of that,” Cadogan wrote in a blog post the day the deal was announced. “While we are proud of the combined $20 billion the GoFundMe and Classy communities have raised for people and organizations, we recognize the unique opportunity we have to make an even bigger impact — both in the U.S. and around the world — if we do this together.”