What Contentful's $175M Investment Round Means for the Future of CMS

Another week, another unicorn makes its way across the windswept landscape of CMS...

OK, enough melodrama. The dust has been settling for a few days since Contentful's $175 million Series F funding round, and it's time for a little reflection. No question: this is a big deal for the Berlin-based headless CMS platform, which is now sporting a valuation of around $3 billion.

As they say in the pizza industry, that's a lotta dough.

Clearly, Tiger Global – who led the round – sees a lot of promise in Contentful's strategic "recipe" for growth (with perhaps the promise of a public offering on the map one day?) Tidemark and Base10 Partners also joined Contentful's robust investment ticket, which is over twice their previous Series E round of $80 million.

It goes without saying that we've seen a lot of investment activity in the CMS category over the last year. But it's the headless variety that seems to be building more traction in recent months as brands and organizations expand their content channels beyond the website layer. In early June, Contentstack – another headless provider – announced a $57.5 million Series B infusion.

Again, a lotta dough. And a big opportunity for these growth-stage challengers in the CMS and DXP markets.

So what does this all mean for the future of CMS?

In a word: transformation.

Building on a Headless Legacy

There's no question that Contentful had a banner 2020; Tiger wouldn't have invested at a 9-figure level without some confidence around performance. But more importantly, investors bank on the vision – something that Contentful is already laying out for the market. They no longer view themselves simply as a "headless CMS" for creating omnichannel experiences, but as a content platform that thinks beyond the limitations of networks and bandwidth.

Sure, this is still grounded in the world of APIs, where apps "talk" to one another and integrate around key capabilities. As digital experiences have evolved to include a wider range of endpoints (think IoT devices, voice assistants, and more), the landscape has become more complex and disjointed.

This is where Contentful is focusing its transformation. They want to simplify the complexity and harmonize organizations by helping them deliver their digital content faster – and personalize it for the right target at the right moment.

As the name implies, Contentful’s focus has always been on content. And while building apps has often been the domain of developers, Contentful has made its product much more approachable for marketers and content strategists. As the role of the "builder" expands, their tools are becoming even more accessible to a wider range of users within an organization, from sales to customer support. This is yet another way that Contentful is transforming its value and charting a new course for CMS.

Funding the Future of Digital Experiences

According to Steve Sloan, Contentful's CEO, the latest round of financing will enable the company to accelerate its investment in both its team and technology, helping to support its growing ecosystem of customers and partners. Contentful is already trusted by over 30% of the Fortune 500, with leading brands such as Shopify, Staples, Atlassian, Electronic Arts, Chanel, Roche, and Vodafone relying on the platform to deliver content experiences.

Along with increased market penetration and a growing customer base, Contentful has gained ground with analysts – a critical indicator for success, particularly with enterprise software. Most recently, the company earned the highest score possible in the partner ecosystem criterion (along with five other criteria) in the Forrester Wave™ Report for Agile Content Management Systems (CMSes). 

As companies re-platform to modern software stacks, they are turning to agencies and system integrators such as Accenture, Publicis Sapient, Huge, Valtech, and others to define a new generation of digital experiences. Contentful is doubling down on relationships with these leading authorities and has now built a channel ecosystem with over 300 partners. This strategy is yet another signal of their overall market maturity – and the potential to scale globally. 

What's next for Contentful – and CMS?

It's nearly impossible to read the tea leaves these days.

When Covid-19 first emerged, every economic indicator called for a long winter. But the increased demand for technology in a remote and contactless world created unprecedented opportunities across the digital industry.

According to McKinsey, more than half (58%) of all global customer interactions are happening in a digital environment. Brands that intend to survive and thrive need to be able to not only deliver engaging content – but do it quickly and at scale.

While the pandemic appeared to be dissipating just two months ago, the more recent rise of the Covid Delta variant and breakthrough cases has again changed the calculus. The prolonged crisis also means the demand for digital content, from streaming services to eCommerce, will continue to grow.

Contentful's focus on both the mid-market and enterprise gives it a lot of room for growth in multiple directions. As companies continue to digitally transform and adapt to a new world, Contentful is well-positioned for whatever comes next - particularly as the role of the "builder" becomes more expansive within organizations.

At the same time, there are many headless CMS platforms entering the market – particularly around the flourishing JAMstack – which is creating both competition and confusion. Additionally, many traditional CMS and DXP platforms have adopted an API strategy, creating greater commoditization and putting pressure on price. And of course, one of the most persistent challenges facing all headless CMS platforms is what Preston So has written about extensively: the inability to preview content.

But Contentful might be breaking away from these limitations. By broadening their view and thinking beyond the confines of the "headless" moniker, Contentful is doing precisely what leaders do by transforming the narrative. They're laying out a vision – and if they can muster $175 million to invest in that vision, they might just deserve that unicorn status.

"We are living in a digital-first era where content makes digital experiences come alive," said Sloan.

Let's see what they can bring to life with a whole lotta dough.