A Legendary VC firm from the valley area is investing $56 million in 37 Signals. This comes after a rumor that SalesForce.com was interested in buying 37 Signals for an undisclosed amount. This is the second time 37 Signals gets an investment despite their comments everywhere about being against VC money. The first time was when Jeff Bezos invested an undisclosed amount back in 2006.
37 Signals founder, Jason Fried said that the decision about taking VC money comes after they were offered an undisclosed amount to sell their company to SalesForce.com.
The VC money will help 37 Signals grow to the next level where they’ll be able to compete with their bigger competitors such as SalesForce.com. Also, this will allow 37 Signals to build their new data center for which construction is planned to begin later this year.
These are bad news for SalesForce.com, it appears that their offer to buy 37 Signals made founders Jason Fried and David Heinemeier forget about their never-ending rant against Venture Capital money and all the companies who have been funded by VCs.
Never say never. I guess the guys at 37 Signals have never said they wouldn’t take VC money and this is now proof that they were just waiting for the right moment. As David Heinemeier said by replying to a comment to their post about Joel Spolski taking VC money for Stack Overflow, noticed how he wrote the word “almost” instead of never.
” First you want to be sure that the thing works before applying the rocket fuel. That means already having a profitable business where the numbers work. Adding capital just accelerates that. Spending VC to fund unproven R&D / market development in software/services seems to almost always a bad idea.” ~ David Heinemeier.
What are your thoughts on this? is this yet another proof that we are in a big bubble that is about to pop?