This round follows a $50M round just last April. Today’s investment is led by Technology Crossover Ventures with additional money coming from Salesforce Ventures. It brings the total investment to $186.3M.
The funding comes on the heels of a pretty successful year, one which apparently piqued the interest of the company’s investors, who must believe their growth trajectory will continue. The company reported a 91 percent annual subscription run rate and a $50 million revenue run rate in 2014 — and CEO Jeremy Roche says investors are capitalizing on the growth of the business.
That momentum and an increasing demand for back-office software in the cloud is really driving the investment, he explained. In the first phase of enterprise software in the cloud, we saw front office software like CRM, office productivity software, marketing automation and content management. As the cloud matures, we are seeing more back-office functions like ERP moving to the cloud and gaining traction.
Up until now, it’s a market that has been dominated by the usual suspects SAP, Oracle and Microsoft, but cloud players like FinancialForce and NetSuite are beginning to make some noise. While Roche admits $50M does not represent a serious threat to these players yet, that’s where he’s setting his sights.
With more than $186M in investment, some might see an IPO in the company’s future and while Roche says “the company is eminently ‘IPOable,’ ” he gave the standard CEO answer of wanting to grow the business and seeing what happens.
For now, he says the company plans to take the money and spread it across the business whether that’s research and development, customer service or sales and marketing. The organization currently has 525 employees and he hopes to crank that up to 750 by the end of this year.
With so many new employees coming on board in such a short time, the company has planned for this by creating a “Knowledge Department,” whose job is to educate new hires about the general company mission, while leaving the specifics of each job to the department management. Roche says the goal is to be sure that every employee is ready when he or she sits down to do actual work.
FinancialForce also works directly with Salesforce.com quite often because the companies offer complementary products with Salesforce concentrating on the front office and FinancialForce concentrating on the back.
When I suggested that Salesforce, which is also an investor would be a good company to purchase FinancialForce at some point (they even share the ‘force’ in their names), Roche brushed it aside as he did with the IPO suggestion, but it’s not so far fetched to imagine Salesforce wanting to buy its way into the back office.
For now FinancialForce is doing fine on its own, even if Roche calls his company’s relationship with Salesforce symbiotic.
“What we‘ve set out to do when we built the business was to use new technology from Salesforce (the platform as a service) and use the back office in a different way, so it’s customer focused,” he said.
He added, “It’s an important part of engagement with customers, just as front office systems are.”