Squarespace Raises $40 Million as Website-Tools Battle Heats

Dollars are flying into the Web publishing sector.

Squarespace, which provides tools for people and businesses to create polished websites, said on Tuesday that it closed a $40 million growth round from General Atlantic, upping its total outside funding to at least $78 million and fueling a big expansion.

Also on Tuesday came a report that Automattic, the parent company of blogging platform WordPress and Squarespace’s main competitor, is trying to raise between $100 million and $150 million in new venture capital funding. The report by Fortune said the fundraising round values the company at more than $1 billion.

Just last September, New York-based investment firm Tiger Global Management paid $60 million to buy shares in Automattic from previous investors, after a similar $50 million investment into the company a few months before.

New York-based Squarespace will use its new Series B round to boost its engineering, design and infrastructure teams with the goal of creating new products and expanding geographically.

The push will increase competition with services including Automattic, as well as newly public and Shopify, which includes website creation among its merchant software services and raised $100 million in December.

Squarespace Founder and CEO Anthony Casalena said the new money for his company would be used to “go beyond websites and online stores.”

Squarespace raised a $38.5 million Series A round in 2010 from investors including Accel Partners and Index Ventures–cash that came after a seven-year streak of profitability, according to VentureWire records.

General Atlantic invested the entire Series B round, with Managing Director Anton Levy joining the Squarespace board of directors.

Squarespace employs 285 in New York and Dublin, with a Portland office opening later this year.