Zuora, a SaaS startup that offers online services to manage and automate customer subscriptions and payments, has raised $20 million in Series C funding led by Redpoint Ventures with the startup’s existing investors; Benchmark Capital, Marc Benioff, Shasta Ventures and Tenaya Capital, also participating in the round. To date, the company has raised $41.5 million in funding.
Launched in 2008, Zuora’s cloud-based billings platform aims to alleviate the need for online businesses to develop their own billing systems, especially to handle recurring payments like those associated with subscriptions.
The startup just released a billing service for cloud providers, Z-Commerce for the Cloud, which automates metering, pricing and billing for products, bundles, and configurations. Last year, Zuora extended its platform to Facebook apps, app developers charge recurring monthly subscriptions for their apps or premium features.
The company says that it has seen fast growth in revenue, bookings and cashflow thanks to the shift to the “Subscription Economy” in both the consumer and enterprise worlds. Zuora signed over $1 billion in contracted subscription revenue in the first quarter of its fiscal year, which ended April 30. Plus, Zuora has been cash flow positive since early this year, and has grown in excess of 400% in 2009 and is on track to repeat that in 2010.
And CEO and founder Tien Tzuo says that he believes the marketplace is large enough for the company to eventually IPO.
Clients using Zuora’s service include Rearden Commerce, Ning, Pandora Media, ReputationDefender and HDCloud. The startup will use the new funding for product development, international expansion, and hiring additional staff.
Zuora provides an on-demand subscription billing and payment service. The SaaS model replaces current manual processes and expensive billing systems with a reliable cloud solution that allows SaaS and subscription businesses to offer tailored subscription services that adapt to customer needs. The founding team includes industry veterans from Salesforce.com, Accenture, WebEx, Oracle, and Postini (now Google). In addition, Scott Thompson of PayPal sits on the company’s board, and Marc Benioff of Salesforce.com provided financial support.