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Big money for content marketing: Sequoia pours $24 million into Percolate

March 18, 2014: 12:00 PM ET

Startup's software manages social media workflows for brands like Mastercard, Ford, Hyatt and Unilever.

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FORTUNE -- The summer of 2012 had a wave of exits hit the burgeoning social platform category. That summer, Buddy Media, Wildfire and Vitrue sold to Salesforce (CRM), Google (GOOG) and Oracle (ORCL), respectively, for hundreds of millions of dollars. Earlier that year, Adobe (ADBE) had purchased Efficient Frontier. The remaining platforms included Syncapse, which restructured itself and laid off a majority of its employees, Involver, which sold to Oracle for a smaller price tag, and Hearsay Social, which has focused on insurance and banking clients.

After the Buddy Media deal (worth $747 million with earn-outs), we learned that the numbers on this kind of business weren't as rosy as initially thought -- the company was burning a lot of money. Meanwhile Google announced last week it will shut down Wildfire.

The era of the social media management system (SMMS) appeared to be over.

The next phase for tech startups looking to capitalize on the billions of dollars Chief Marketing Officers are expected to spend on technology, is content marketing.

In recent months, startups focused on content marketing (and its spin-off, native advertising), have all raised large rounds of funding. Contently raised $9 million in January for its freelance marketplace for branded content. That same month, Sharethrough, a native ad platform focused mostly on videos, raised $17 million. The next day, NewsCred announced a $25 million round for its content marketing platform. Then Sharethrough and NewsCred formed a partnership.

Add one more to the list today: Percolate, a New York-based startup founded by former advertising executives, has raised $24 million in a Series B round of funding led by Sequoia Capital. Existing investors GGV Capital, First Round Capital, Lerer Ventures and ad holding company WPP participated. Percolate's total disclosed funding is now north of $34.5 million. (The  size of WPP's initial investment in the company is undisclosed, but reports place it below $5 million.)

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Founded in 2011 to help brands figure out what content to share on social media, Percolate has evolved to handle all aspects of a marketer's social media activity. Social media moves quickly, which makes things complicated for large, sophisticated brands. They must coordinate with large teams across a number of geographies to produce and share a lot of content very quickly, on many evolving platforms, in a way that's "on message," and "brand safe," that won't get them in legal troubles or cause outrage among customers. Brands are in a constant state of planning, sourcing, creating, publishing, engaging and measuring content.

"The fundamental challenge in social is not about customer service and dealing with fan pages," says Percolate co-founder James Gross. "It's about how to create content, and that's become only more true as social and mobile have merged."

Percolate's platform helps marketing professionals through each of those steps, with tools like a calendar for planning, a library for sourcing and licensing photos, an image editor, a longform writing editor, collaboration tools, a system of approvals, a way to get proper legal permission to republish user-generated photos, and analytics to measure the performance of a piece of content.

Percolate's image editor.

Percolate's image editor.

Along the way, Percolate has picked up 150 clients, including Unilever (UL), which licenses Percolate's software  across almost all of its brands with tens of thousands of end-users, as well as Mastercard (MA), Ford (F) and Hyatt (H). The company has grown revenue by 300 percent over the last nine months and aims for the same level of growth this year, Gross says. Percolate has the majority of its $9 million Series A fundraise from November 2012 in the bank, he says.

This round of funding will help fuel the company's expansion into more mobile tools, like its employee advocate app, as well as geographic expansion. Percolate has 106 employees in New York, London, San Francisco and Austin, and it's hiring in Chicago.

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As the company expands, Percolate increasingly competes against that first wave of social media management systems, which are now integrated into larger enterprise software of their parent companies. Percolate's differentiator, Gross says, is its content-first approach. "Our core belief is that content is the atomic unit, not the campaign or some sort of other element," he says. "All of our workflows are built around the content."

Percolate raises its large round of funding just as large brands are beginning to pour more money into content marketing tools. The timing is right for the company to grab market share, though Percolate's founders are happy to point out they've been planning for this all along. "We have always had the vision," CEO Noah Brier says. "We haven't pivoted into this vision. We plan to be the system of record for (content marketing)."

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