Subscription management platform Chargebee raises $ 250 million while SaaS rises

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Chargebee, a subscription management and recurring billing platform used by big name companies like Okta, has raised $ 250 million in a round of funding to a $ 3.5 billion valuation.

The increase comes as the software-as-a-service (SaaS) market continues to flourish – public cloud end-user spending is being geared to become a $ 400 billion market by 2022, according to Gartner, where SaaS is the bulk of this. spend at $ 145 billion.

Founded in 2011, Chargebee’s core subscription management smarts help SaaS companies identify new revenue streams through experimenting with pricing models; additional sales through pitching additional features or bundles; and get a comprehensive overview of all subscription and customer data.

On top of that, Chargebee also offers tools to automate recurring billing and billing; operate global payment options in more than 100 currencies; and forecasting through data-infused financial reports and analytics.

Chargebee reports

Chargebee had previously raised about $ 218 million, including a $ 125 million tranche less than a year ago, and with an additional $ 250 million in the bank, the company is now well funded to strengthen its core platform with new features, including fresh prices and sales of models; newer payment methods; and additional reporting options. This builds on a duo of recent acquisitions in the revenue recognition and churn management area that expanded the Chargebee’s reach further into the subscription management area.

“We will continue to listen to our customers to understand their need to scale,” Chargebee co-founder and CEO Krish Subramanian told VentureBeat. “We will focus on getting Chargebee into the hands of more customers globally as we build our team to meet the growing demand.”

Subscriptions are rising

So what is it really that is creating this increase in demand? Well, data suggests that subscriptions (and SaaS by extension) will only continue to grow, be it through video games, music streaming or enterprise software. Building a business around recurring revenue versus one-time purchases creates a healthier business model, as a business does not have to generate as many new sales. But while Gartner has previously predicted that 75% of all direct-to-consumer businesses will offer subscription services by 2023, only one-fifth of them will “succeed in increasing customer retention.”

Reducing churn and retaining customers is at the heart of Chargebee’s offering – it’s about giving SaaS companies insight through data and enabling them to try new things at a time when much of the commercial world needs to experiment. with new ways of doing business.

“There is already a shift among B2C companies that we expect will continue where companies have had to adjust their business and revenue models to meet changing consumer demand, the majority of which is no longer coming in the door at physical locations. ” The subramanian explained. “To stay afloat, we’ve seen a lot of experimentation with new product lines, price changes, and overall attempts to make brands more sticky to increase customer acquisition and retention.”

While many companies have been close in line with subscriptions since their inception, such as Netflix or Spotify, other more “traditional” companies have also entered – Taco Bell, for example, recently launched a $ 10 monthly taco subscription. This is based on a recent trend where more unconventional subscription services have come on the market over the last decade, from underwear to care products and more.

“More traditional companies like the automotive and food and beverage industries are now entering the subscription space to increase customer loyalty and collect better data,” said Subramanian. “Taco Bell’s subscription service is an example of building virality with a new model. We have also seen an increase in subscriptions to refilled goods, healthcare, beauty and wellness and e-learning spaces to meet consumer demand for convenience and accessibility. “

The basis for much of this drive has been the emergence of cloud computing, which has essentially made SaaS the “dominant IT model for software,” according to Subramanian.

“The pandemic has been a major driving factor in this development, as the digital transformation effort has accelerated the use of subscription services,” he said. “For example, as the number of employees working externally has fluctuated in recent months, companies have had to scale collaboration tool licenses up and down based on the company’s needs. There is no longer a one-size-fits-all approach and demand can change very quickly. Flexibility is now a necessity. ”

This is where Chargebee is particularly well placed to take advantage of these diverse societal and industrial changes – it supports experiments, provides valuable real-time data on the impact of their decisions, and ultimately helps them grow.

“The biggest problem we solve is helping companies scale and effectively manage growth,” Subramanian said. “We make workflows efficient and reliable by connecting different data points that provide the company with operational insights across the subscriber’s life cycle to promote customer retention and financial compliance.”

Chargebee’s most recent round of funding was led by Tiger Global and Sequoia, with the participation of Insight Partners, Sapphire and Steadview Capital.

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