This former Salesforce star has a plan to replace Oracle and SAP - and he just raised another $115 million to do it
ZuoraZuora CEO Tien TzuoSubscription billings platform Zuora announced that it has nabbed another huge round of funding at $115 million on Wednesday, bringing its total capital raised to $250 million.
Zuora CEO Tien Tzuo didn't comment on the company's valuation or its financial figures. But considering it was valued at just under $1 billion in its last $50 million round in 2013, Zuora is probably the latest startup to join the "billion-dollar club."
For this round, large mutual funds like Wellington Capital and Blackrock have joined existing investors including Benchmark Capital, Greylock, and Salesforce CEO Marc Benioff. It's become pretty common for large public investors like Wellington and Blackrock to push into Silicon Valley startups lately, but Tzuo argues today's deal is a reflection of Zuora's solid financials that give the confidence of a public company.
"The investors saw a company with significant scale and growth, and numbers that are starting to look like a public company," Tzuo told Business Insider. "We call this a 'private-IPO' because these are public market investors that normally you won't be able to tap into [as a private company]."
Zuora is a familiar name if you've been following the software-as-a-service (SaaS) business. Its software is focused on subscription-based companies and helps them better track things like recurring revenue and retention rates - metrics that traditional ERP software companies don't make it easy for companies to follow. It's why Tzuo believes Zuora will eventually displace Oracle and SAP's traditional ERP software.
Tzuo calls this shift to subscription-based business a "Subscription Economy." Software companies like Salesforce were early pioneers in this space, where they have to keep their customers happy to retain them every month. This trend has moved beyond tech companies now, as large firms like Schneider Electric, General Motors, and News Corp. have all deployed this model one way or another (they're all Zuora customers, too).
"This is a profound change that will have ripple effects through our world for decades to comes," Tzuo says.
Tzuo was a star executive at Salesforce, where he worked his way up to chief strategy officer after starting as employee #11. He was one of the most trusted executives of Salesforce CEO Marc Benioff, who ended up seed investing in Zuora in 2007. Benioff continues to be a strong supporter.
Tzuo claims Zuora has tens of millions of dollars sitting in the bank, and they have the level of capital where they never have to go public. But he says the subscription billing software industry is growing so fast that it made sense to raise more money to further expand its growth.
"This market is exploding that if you want to grow fast, you have to spend capital," Tzuo said.