This morning a trio of software companies announced new funding. Each of the companies shared notes concerning their financial performance at the same time. As we want to encourage more private companies to share growth metrics, what follows is a quick digest of three rounds, worth $130 million in total.
We’ll approach them in decreasing size of investment.
Vlocity’s Series C
Founded in 2014, San Francisco-based cloud software startup Vlocity has built “industry-specific CRM (customer relationship management) solutions on the Salesforce platform,” per TechCrunch. It targets five verticals: communications and media; insurance and financial services; health; energy and utilities; and government and nonprofit.
Today the company announced a number of key results. First, the firm has raised $60 million, co-led by Sutter Hill Ventures and Salesforce Ventures. Second, that capital pushed its valuation to “above” $1 billion according to the firm, making VLocity a fresh unicorn.1
The funding takes the 700-person company’s total venture capital raised over time to $152.8 million, according to its Crunchbase profile. Notably, Vlocity took its time raising this Series C. Its last raise was a $50 million Series B that was announced in September 2016.
Building to the new capital, Vlocity “just surpassed” $100 million in annual recurring revenue (ARR) it shared. We can quickly surmise that Vlocity is worth around 10x its current ARR through division; it’s worth more per-dollar of trailing revenue, of course, but for SaaS companies at its stage, ARR multiples are a common metric of relative valuation.
10x, of course, is a regular multiple for software revenues in the current era.
Sauce Labs’s “Growth Investment”
Another SaaS company that waited a while between rounds is Sauce Labs, also based in San Francisco. Sauce Labs describes itself as a “continuous testing cloud” provider. It’s been around for more than a decade, having been formed in 2008.
This morning the company announced a $50 million self-titled “growth investment” led by Riverwood Capital. (Riverwood is new to me, but has over three dozen investments in Crunchbase, making it hardly a new player in the capital game.)
That in hand, let’s talk growth. Sauce Labs gave us two facts. First, that the company’s ARR grew by “nearly 40 percent” in 2018. And that 2018 was “its fourth consecutive year of double-digit ARR growth.” As you can quickly see, it’s hard to really vet its 2018 performance. If the company’s revenue base is large, and its losses falling, a 40 percent ARR growth rate could be attractive.
But since the firm isn’t touting any historical three-figure percentage growth, it’s hard to guess the revenue base that the 40 percent growth stems from. What we do know is that the firm was able to raise $50 million more, so the math must have been somewhat eye-catching; some metrics are better than none.
The funding takes Sauce Lab’s total funding raised over time to $161 million, according to its Crunchbase profile. Its last announced raise took place in November 2016 – a $70 million round led by Centerview Capital.
Applicaster’s “Growth Round”
On the other side of the country, New York-based Applicaster’s SaaS app management platform, Zapp, aims to give brands the tools it needs “to prototype, develop, and maintain direct-to-consumer apps across phones, tablets, and connected TV devices.”
This round is the smallest of our bunch. Applicaster has raised what it calls a $20 million “growth round,” led by Viola Growth. (Based in Tel Aviv, Israel, Crunchbase has 26 investments by Viola in its database; it led 16.) 83North and Saban Ventures also took part in the round, along with Pitango and Planven Investments.
Crunchbase has a number of investments listed for Applicaster, but few with dollar amounts attached. As such it’s hard to tell how much money the company has raised in total. That said, the firm did share that it grew its ARR by 100 percent, presumably in the last year.
The +100 percent ARR move is a metric coveted by venture capitalists. Companies that can grow their recurring top line by that much can afford to ingest, and invest capital, making them prime VC targets. Applicaster is evidence of that fact.
And that’s that. If you are a SaaS company and announcing a new round, do everyone the favor and drop as many growth metrics as you dare. The fewer you share, the less we care!
Illustration: Li-Anne Dias.