adaptive-insights
adaptive insights

Cloud Finance Intelligence Startup Adaptive Insights Gets $75M, Reportedly At A Unicorn Valuation

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The rise of the CFO from back-office number cruncher to business leader is being played out across a number of companies, from tech leaders like Twitter through to consumer giants like PepsiCo. That shift of gravity, it turns out, is also being played out in the world of enterprise software.

Adaptive Insights, a fast-growing startup that sells cloud-based services to finance and other management teams to model a company’s performance and other business intelligence, today is announcing that it has raised $75 million in funding — a Series G investment that brings the total raised by the company to $176 million.

“The market opportunity here is huge as the CFO has become a power player in the C-Suite,” Tom Bogan tells TechCrunch. Bogan came on as CEO earlier this year while retaining his other role as chairman of Citrix. “As a former CFO myself, I have seen this first hand and it is accelerating — look at Twitter’s Anthony Noto and Google’s Ruth Porat, and the fact that 25 percent of CEOs at Fortune 500 companies are former CFOs.”

The news comes on the back of Adaptive Insights — originally founded in 2003 — seeing a very strong period of recent growth, with (undisclosed) revenues rising 50 percent year-on-year on a customer base of 2,700, many of them huge companies in their own right (they include the likes of American Family Insurance, Coca-Cola, Boston Scientific, LinkedIn, Palantir, Zendesk and more).

The funding — which will be used to help the company continue to expand its business both in terms of products and international footprint — is notable for another reason. It looks like Adaptive Insights is joining the so-called “unicorn club” of startups valued at $1 billion or more.

Not that the company wants to talk about this. Bogan would not disclose the company’s valuation to TechCrunch except to note that it is a “significant increase from our previous funding round and we are very pleased.”

However, three months ago, the company’s founder and chairman Rob Hull gave a long, but largely unnoticed interview on the growth his company went through to take its place in the so-called “unicorn club”, noting that even in its last financing round in 2012, when it raised $45 million, it was “already getting close.”

On the other hand, VC Experts puts the valuation far lower than this, $453 million post-money, based on data in the startup’s amended certificate of incorporation.

For what it’s worth, Bogan says this round was oversubscribed and Adaptive Insights calls the mix of investors who did come in a “dream team.”

They include new investor JMI Equity, alongside previous backers Norwest Venture Partners, ONSET Ventures, Bessemer Venture Partners, Cardinal Venture Capital, Monitor Ventures, and Information Venture Partners. JMI Equity is notable for its experience backing other cloud startups that have blown up, such as Eloqua and ServiceNow. “It’s the ideal mix of investors at the right time – for both the stage of the company and the market in which we’re competing,” Bogan says.

CFO-style metrics go mainstream

Adaptive Insights is considered one of the leaders in the area referred to as “corporate performance management” (or CPM for short, which is only confusing if Adaptive’s kind of CPM is used by an online advertising team looking to improve their CPMs).

When the company, originally called Adaptive Planning, first started its business in 2003, its focus was mainly on finance forecasting. It grew steadily for years on a relatively modest amount of funding — raising just over $30 million in its first nine years.

Its growth after that is interesting in how it relates to other currents in the world of tech. The rise of cloud computing and big data services used by non-technical people gave the company an opening to offer its services out to a wider swathe of people in the business organization, who were at the same time demanding more data products to help with their decision making.

(You could argue that this may have also been some of the fuel for why CFOs and finance peoplein general have become so much more strategic in businesses, too.)

Later products at the company, under the name Adaptive Suite, have expanded well beyond basic financial planning to include business intelligence, expense analytics and more, using the cloud-based model to make the software cheaper and easier to implement than incumbent solutions for the same problems.

“We try to do to Hyperion what Salesforce did to Siebel,” Hull says, referring to the BI software business Oracle acquired in 2007.

The other incumbent stalwart that Adaptive is trying to disrupt is the very persistent use of Microsoft’s Excel. “The demand for our cloud CPM solutions spans the increasing need to replace manual, error-prone, non-scalable Excel on the low end and expensive, complex, IT-intensive legacy systems on the high end,” Bogan says. Other competors in the same area as Adaptive Insights include Anaplan and Tidemark.

While the main suite of services is sold on a subscription basis, Adaptive Insights also builds margin by offering professional services to customers, too.

In keeping with its general growth, the company has also been expanding the customer base that it targets, using its entry point of people on the finance team “to get a seat at the table with the rest of the organization,” in Hull’s words.

“Financial and operational management is the cornerstone for every successful company. Adaptive leads this market through tremendous product innovation, strong executive leadership, and a rapidly growing, fanatical customer base. These characteristics define high performing SaaS companies,” said Peter Arrowsmith, general partner at JMI Equity, in a statement. As part of this round,. Arrowsmith is joining Adaptive as a Board Observer, the company says.

Meanwhile, Adaptive Insights is also swallowing another pill in commonly found in the startup medicine cabinet: in its earlier years, it was profitable, but today it is not.

“We are currently in investment mode by design,” Bogan says. But he adds that this is likely to be the company’s last round of funding before looking to go public.

“We don’t currently have plans for additional private funding,” he says. We’ve always had a goal of building a leading company worthy of the public market and it remains something to aspire to in the future. We see an IPO as just one step on the journey to building long term value for our shareholders, and a relevant and lasting company for customers, partners, employees and the industry at large.”

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