Productivity App Evernote Gets Another $85M, ~$64M In Secondary Financing, Led By London's AGC Equity
Evernote, the personal data and productivity app that now has over 45 million users, is today announcing it has raised another $85 million, with 75% of that, $63.75 million, in the form of a secondary investment.
Context & Ripple Effects
Evernote comes into this round off a year of expansion: Sequoia Capital doubled down with a big new investment in June 2011, and the company bought iPad handwriting app Penultimate in May 2012 to stretch beyond plain-text notes. The new $85M round, led by London's AGC Equity, differs in kind from those earlier moves — 75% of it, $63.75M, is secondary financing that buys out existing holders rather than funding the business.
The pickup was unusually broad for a single funding announcement — eight outlets from AllThingsD to Tech in Asia carried the story on the day — which reflects how uncommon large secondaries still were in consumer software at the end of 2012. With more than 45 million confirmed users, Evernote is structuring this round to reward insiders while leaving its path to a listing open.
First-order effects
- Early investors and option-holding employees capture roughly $64M in liquidity through the secondary portion, letting holders of positions such as Sequoia's June 2011 stake partially exit years before any public offering.
- Evernote itself banks only about $21M in primary capital — modest against a 45-million-user base — so the round rewards existing shareholders far more than it funds operations.
Second-order effects
- AGC Equity's lead puts a London-based late-stage buyer directly into pre-IPO consumer software equity, establishing a route for European crossover capital into Silicon Valley secondaries.
- Competitors in note-taking and personal-data apps face a rival whose backers have already secured partial returns, easing pressure on Evernote to rush an IPO to satisfy its cap table.
Third-order effects
- If secondary-heavy rounds become routine, insider liquidity decouples from IPO timing, allowing private companies to stay private longer while crossover firms accumulate pre-listing positions.
- A maturing secondary market shifts bargaining power in late-stage deals toward firms that can offer founders and employees cash now, changing how growth-stage term sheets are negotiated.
The trend: Late-stage venture is shifting toward large secondary financings that deliver liquidity to insiders without an IPO, drawing crossover buyers like AGC Equity into pre-public consumer software stakes.