Email is still hot: Why SendGrid got $21M in VC funds

All those email messages from web applications and services for notifications, updates and subscriptions are growing at a fast clip, and that’s helping to spawn new opportunities in so-called transactional email. SendGrid, a TechStars graduate, is a big beneficiary, becoming one of the largest email platforms in the world, with 40,000 customers and 2.6 billion emails sent a month.
Now, the Boulder, Colo.-based company says it has raised a $21 million Series B round led by Bessemer Venture Partners, with additional funding from existing investors Foundry Group, Highway 12 Ventures, SoftTechVC, 500 Startups and TechStars. This follows a $5 million Series A round raised in 2010.  SendGrid will use the money to grow internationally, increase hiring and invest in product, developer relations and customer support.
Since launching in 2009, SendGrid’s cloud-based SMTP platform has been a valuable tool for many web application companies that stay in touch with their users through emails. It has delivered some 27 billion emails to date. Companies such as Pinterest, Hootsuite, Foursquare and Path all offload their transactional email to SendGrid. It’s a growing market, as companies rely on email to update users and keep their services sticky. SendGrid isn’t just handling a lot of emails; it’s doing some smart work to get past spam filters and blocked IP addresses to ensure emails reach their destination.
“Web application companies are under tremendous pressure to build fantastic services quickly. Offloading a core service like transactional email management and delivery is a smart and simple choice,” said Jim Franklin, CEO, SendGrid.  “Today’s funding validates our original vision and supports our global expansion plans as we continue to build out our team.”
SendGrid also said it’s launching on Windows Azure, Microsoft’s (s msft) cloud platform for web applications.  Windows Azure customers who sign up for SendGrid will receive 25,000 free emails each month. SendGrid is showing the opportunity in infrastructure apps that help developers plug in needed services that keep their apps running.