Erply

Erply: Skype of Business Software?

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Erply, a business software firm, has raised $2 million in funding from Redpoint and Index Ventures, along with Marten Mickos, Zack Urlocker (both formerly of MySQL), Kenny van Zant (SolarWinds), Aydin Senkut, David McClure and the Accelerator Group.

The company, founded by Kristian Hiiemaa in Estonia, is a 2009 Seedcamp winner and is already profitable. Its client base is growing roughly 20% each month, according to Hiiemaa. They currently have 2,000 business customers and 8,000 users.

Seedcamp is a UK based incubator program cofounded by Saul Klein. This is the first Seedcamp winner to get funded by Index Ventures, where Klein is a partner.

“We think Erply can do for business software what Skype did for telecom,” Klein told us.  Skype, like Erply, was developed in Estonia before being sold to eBay in 2005 with a $2.75 billion valuation. Klein is hoping that Erply follows a similarly disruptive path, by making traditionally expensive business applications more affordable for smaller companies.

Erply specializes in business management software, helping companies deal with inventory control, bookkeeping, and other tasks, from their brick-and-mortar stores to online operations. While rivals like SAP, Microsoft and Oracle dominate the larger accounts, Erply focuses on small businesses— courting them with cheaper fees. Typically, a small business will fulfill their software needs with the larger providers or local developers, but Hiiemaa says more are defecting to Erply as the company finds success in its marketing efforts. The lionshare of the $2 million will be funneled towards marketing and expanding the company’s team in Eastern Europe.  So far, the company counts 8,000 seats and 2,000 companies.

Although Erply offers a mix of free and paid packages, many customers are opting for the paid packages (the average subscription fee is $74 a month) — the company boasts a 25% conversion rate from free to paid. Small start-ups are taking advantage of the free versions, but Hiiemaa says most companies are entering on the pay side.

Sidenote: the company is also betting on the iPad— Erply is preparing to launch a new application for the device in the near term that will help with real time inventory management.

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