Social Media for Bankers? Hearsay Raises $ 30M
SAN FRANCISCO – Hearsay, the social media startup that caters to bankers announced last week that it had raised $ 30 million during its Series C round of fundraising. Including the latest round, the company has raised more than $ 50 million. Investors included Sequoia Capital and N.E.A. who are betting that the highly regulated companies in the financial services industry will turn to social media network to make money. In the past year, Hearsay has added Raymond James Financial (NYSE:RJF), Bank of the West, and Allianz Global Investors to its customer list.
While there is no doubt that social media companies such as Facebook (NASDAQ:FC) and Twitter have become an integral part of our daily lives, regulations in the financial services industry limits what kind of information can be transmitted. Banks or other companies in the industry who want their employees to use social media are required to monitor and archive their employee’s postings; as such, many companies have banned the use of platforms such as Facebook from their networks.
In an effort to help employees better understand the regulations, Hearsay offers software that includes examples of approved content and allows members to customize their messages as long as they are vetted. In addition, the site allows users to ‘listen’ to activity on their networks. While it is too early to see how these tools will benefit the industry, some advisers and other professional have said that the software has helped them network.
According to Hearsay CEO, Clara Shih, the approach is starting to win over many CEOs within the industry. ‘The CEOs who are getting involved are saying it’s no longer enough to dabble in social media as a side project.’
The funds from the Series C round will help the company to continue its growth either organically or through acquisition. The company also announced the opening its first overseas office in London later this year. In August, the company signed an exclusive Elite Strategic Partnership with industry association LIMRA. The partnership will enable LIMRA’s members to use social media to attract, retain, and grow customer relationships.
While the company has gained traction within the industry, it is too early to tell whether the software and other controls will help users navigate the myriad of regulations that govern the financial services industry; if it does then Hearsay could potentially provide a solution for how financial service providers communicate with their clients in the internet age.