As more businesses move their IT from on-premise solutions and into networked, cloud-based services, startups that are building products for them to do this are raking in yet more funding as they grow. NewVoiceMedia, a UK business that offers a solution for companies to run their customer contact centers and sales services in the cloud, has picked up an additional $30 million in funding.
The latest round is led by new VC firm BGF Ventures, with participation also from existing investors Bessemer Venture Partners (BVP), Eden Ventures, Highland Capital Partners Europe, Salesforce Ventures and Technology Crossover Ventures (TCV).
Salesforce is a strategic partner for NVM: one of the startup’s main products is ContactWorld for Sales, which lets salespeople phone and manage client relationships in the cloud with a combination of calls, chat and CRM management tools. This integrates with Salesforce’s own platform and gives the latter a way to keep own customers using its own products for longer.
The company is not disclosing its valuation but we understand that it is “not quite $500 million” from a reliable source.
NVM to date has raised $141.3 million, and it is one of the more successful UK enterprise startups when it comes to building a business in Europe but having it financed by investors from the Valley.
While NewVoiceMedia may not have a flash brand and profile, it’s growing at a very steady and successful pace. “At BGF Ventures we look to back UK companies that have the ambition and potential to be global technology leaders; we believe NewVoiceMedia will be one of the most successful software companies to emerge from Europe this decade,” said new investor Rory Stirling from BGF Ventures in a statement.
For a while now, there has been a lot of talk right about the impending funding bubble about to burst: while it’s relatively easy currently for a startup with a smart idea to pick up some funding to see if it can grow, the belief is that this may not hold out forever. NewVoiceMedia’s CEO Jonathan Gale describes this latest investment as “strategic capital”, to continue doing what it has been for the last couple of years — expanding internationally and adding more talent to the organization to build the business.
“The climate has certainly cooled down, although there is still capital available,” he said. “The money is gravitating back to businesses with strong growth and capital efficiency with a clear path to profitability. The focus has moved away from growth at any cost and back to strong financial management, core business fundamentals and well structured and executed business plans. Everyone knows the market is cooling and that it is likely to cool off more over the coming months. The days of vanity valuations based on irrational multiples are over, although we never played that game anyway.”
Gale says that since replicating its cloud platform in North America and Asia after earlier launching in London and Europe, the business has grown massively in those markets in particular. The company now works with some 500 enterprises, with an annual revenue run rate of $50 million. While today the balance between Europe and these markets is more in favor of NewVoiceMedia’s legacy business, Gale said he expects that going forward the U.S. is likely to become its “center of gravity” in terms of future customers. International business in the last year grew 528%, he said.
However, that is not the full story. One of the reasons why Salesforce has been interested in the startup is because it has helped Salesforce gain a better foothold in Europe specifically.
“Salesforce Ventures is committed to investing in technology that extends our offerings and makes our customers even more successful”, said John Somorjai, EVP of Corporate Development and Salesforce Ventures, Salesforce, in a statement. “NewVoiceMedia is a great example of the amazing innovation and commitment to customer success that we’re seeing across Europe”.
Gale says that this was fundamentally a strategic round to facilitate Salesforce making a larger investment in NewVoiceMedia, “the largest investment that Salesforce has made in any non-U.S. headquartered company to date. Timing was not the motivator for us in this round,” he said.
The opportunity for NVM is pretty huge: businesses spend about $20 billion annually on telephony bills for customer care and sales calls — with a large part of that today still sitting in legacy systems. But as businesses look to cut costs, update software and leverage the power of new networked services to integrate more functionality, this gives an opening to the likes of NewVoiceMedia to win new business.
NewVoiceMedia estimates that today’s contact center market numbers about 20 million seats and that by 2020, it will see 30% cloud penetration.
It’s not alone in trying to nab that opportunity, of course: in the area of cloud-based customer contact solutions, for example, NewVoiceMedia competes against the likes of InsideSales and Five9 but also — as you would expect in a disruptive industry — a fair amount of what Gale refers to as “fledgling call center applications.”