Fast-growing Burlington software company Acquia Inc. has raised $50 million to finance expansion as it considers an initial public stock offering next year.
The Acquia investment continues a run of big-money funding of tech startups around the country and in the Boston area. In March, online retailer Wayfair LLC raked in $157 million, and data storage provider Actifio collected $100 million from investors; those investments valued both companies at more than $1 billion.
“There’s definitely some frothiness on the valuation front,” said Anand Sanwal, founder of CB Insights, a New York firm that tracks venture capital spending. “Big rounds are becoming commonplace.”
Venture investments have become larger as tech companies wait longer to go public and look to private markets to fund their growth, said Sanwal. What is more, he said, venture capitalists are willing to stick it out longer to ensure portfolio companies are in peak shape before courting Wall Street.
Overall, investments into later-stage companies in New England jumped to $378 million for the first quarter of the year, a 62 percent increase from the last quarter of 2013, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.
Valuations and investment rounds are getting bigger as tech giants such as Facebook Inc. and Google Inc. pay top dollar buying software companies.
For instance, Facebook spent $19 billion on the messaging service WhatsApp earlier this year.
“With everyone reaching for a piece of the pie and willing to pay sky-high valuations, it is only natural that companies will both expect and receive more,” said Matt Turlip, an analyst at PrivCo, a New York firm that provides financial research on private companies.
Acquia has emerged as one of the hottest tech companies in the area.
At its core, the firm sells an open source software platform called Drupal that its customers use to develop websites and mobile apps.
Though open source software is freely available on the Web, major companies pay Acquia because its software is so robust they can build entire websites with it. Acquia counts Twitter Inc., Mercedes-Benz, and Warner Music Group as customers. Its revenue in 2013 was $68 million, said Tom Erickson, the chief executive.
Erickson would not disclose the valuation that the latest funding round created for Acquia.
So far, the company has raised $118.6 million since it was founded in 2007. In Massachusetts, the only privately-held software companies that have raised more money over time are Wayfair, Actifio, and the Waltham computer security firm Bit9 Inc.
Tech companies are not alone in being flush with cash. The venture firms that back them are also raising bigger funds. The firm that led the Acquia deal, New Enterprise Associates, has a $2.6 billion investment fund to work with.
With all the interest and competition among venture capitalists, Erickson said Acquia could have raised more money. But Erickson said he was worried that would result in the company being overvalued in the market.
“There’s been a backlash against over-valued tech stocks,” said Erickson. “We took a lot less money than was on the table.”
Indeed, some big tech stocks such as Twitter Inc. have fallen in the market this year. And recently several companies with IPOs were forced to cut back on the amount of money they were planning to raise from Wall Street, said Kathleen Smith, principal of Renaissance Capital, an IPO research firm.
“We expect IPO investors will continue to be selective and price-sensitive until we see a more pronounced turnaround in returns,” said Smith. Still, she said, “the pace of filings is strong, including many biotech and high-growth technology companies.”
Acquia does not plan to file an initial offering this year but it is the company’s eventual goal, said Erickson. “We want to become a long-term player in the market.”