Because sometimes it’s the companies you don’t hear about constantly. FastSpring, founded in 2005 as an all-in-one e-commerce solution for companies selling desktop software and downloadable games before heading into the Software-as-a-Service space in 2011, has received a significant but undisclosed new equity investment from L.A.-based Pylon Capital. This is the first outside funding the previously bootstrapped company has taken in.
The funding comes with some shifting roles for one of FastSpring’s co-founders. While all four will remain with the company, CEO Dan Engel is now becoming Senior Vice President of Marketing and will serve on the company’s Board of Directors. Ken White, Ryan Dewell, and Jason Foodman will continue with their prior roles. Pylon Capital Managing Partners Chris Lueck and Tom Tzakis will now join FastSpring’s management team.
The company, which competes directly with DigitalRiver, offers more than payments, but instead is a way for businesses to outsource their e-commerce infrastructure, including product merchandising, digital fulfillment, global tax compliance, online payments that support multiple currencies, localized order pages, PCI compliance, refund management, reporting, and more.
Its newer service SaaSy (our coverage), also brings support for subscription-based payments, as are more common with online businesses. Since the launch of that option, FastSpring has grown its business from 1,000 clients worldwide to now 2,200, five hundred of which are using SaaSy. While the company can’t disclose the names of many of its customers, those it can mention are familiar: Smith Micro, Adobe, Flexibits (makers of Fantastical), Toshiba, Random House, and Intego (Anti-virus).
The company has been steadily growing its revenue over the years, climbing from less than a million in 2007, to $35 million in 2010, then $66 million in 2011, $95 million in 2012, and in the trailing twelve months, it’s over $100 million. It was also ranked #53 in Inc. Magazine’s Inc 500 list of fastest-growing companies in the U.S. in 2011. And Deloitte & Touche ranked it the #1 fastest-growing company in the Greater L.A. area and #13 in North America in its 2011 Technology Fast 500 awards.
Which perhaps begs the question: why the new investment?
Explains co-founder Dan Engel, “as a group of serial entrepreneurs, we have a lot of experience in getting from A to B — ‘B’ being getting to where we are as a company in terms of revenue, profit, headcount, and what we’ve scaled to, to date,” he says. “But we felt like we wanted some outside expertise from folks who had experience going from B to C, which is turning the business into something worth many hundreds of millions of dollars.”
Pylon’s L.P.’s have experience in all the areas where FastSpring now needs to grow, Engel says, which includes things like scaling sales and support both in the U.S. and internationally, for example. FastSpring has limited experience in Asia, which it sees as a big opportunity, and it also has a large percentage of its customer base in Europe (around 30% vs. the ~45% in the U.S.), but not much experience on the ground in that region – something which it plans to change, following the funding, in fact.
The company also wants to expand its e-commerce offerings outside of software, expand deeper into the gaming vertical, and break into micro-transactions (those under $10.00).
And FastSpring is working to develop its own private label app store solution for companies that want to have their own embedded store which works within their existing software. “There’s a lot of demand right now, and there really isn’t much in the way of solutions that we’re seeing,” Engel says of the app store offering. “And what’s neat about our app store is that it has all the capabilities of our web store – which is pretty vast,” he adds.
The Santa Barbara-based company, now a team of 24, will use the new funding to scale and hire, with plans to add around 10 more this year across all positions.