Back Office Cloud App Provider FinancialForce.com Raises $110M
FinancialForce.com, whose applications for back office business functions like billing and hiring are based on the Salesforce1 cloud infrastructure, announced late Wednesday it has raised $110 million to fund its continued growth.
San Francisco-based FinancialForce reported revenue growth late last year that, if maintained, would put the company on pace to bring in $50 million in 2015. With its new influx of capital, FinancialForce can aim to increase its revenue growth further, says CEO Jeremy Roche.
“The primary thing is fueling the business to capitalize on that growth,” Roche says.
Technology Crossover Ventures led the investment round, with participation from existing investor Salesforce Ventures, the corporate investment arm of Salesforce. The new money brings FinancialForce’s total fundraising to $220 million since the company was founded in 2009.
FinancialForce is vying for customers in a field occupied by companies such as San Mateo, CA-based NetSuite (NYSE: N), which reported 2014 revenues of $556.3 million, and San Jose, CA-based Intacct, a specialist in cloud financial software. Intacct is also integrated on Salesforce1.
FinancialForce has recently attracted big business customers including Hewlett Packard and Compuware, which contribute greater than average revenues compared with other subscribers. In terms of numbers, the bulk of FinancialForce’s customers are mid-market companies to sizeable small businesses, Roche says.
“Companies outgrowing QuickBooks are a good entry point for us,” Roche (pictured above) says.
FinancialForce customers tend to be professional service providers such as consultants, media companies, and not-for-profit organizations, rather than manufacturers, Roche says. FinancialForce sells a full suite of applications called FinancialForce ERP, for enterprise resource planning. But customers can subscribe cafeteria-style to one or more of the suite’s Web-based apps, which include Financial Management, Professional Services Automation, Supply Chain Management, and Human Capital Management.
“We’ll even go beneath one product,” Roche says. For example, a customer could start using the billing function without implementing FinancialForce’s full financial management package, he says. Customers can continue using programs they’ve bought from other companies.
“We have a concept of playing nicely with whatever a customer already has,” Roche says. “This is part of the reason why we’re getting fast adoption.”
This “App Store” approach is designed to lower the resistance that has arisen when cloud app vendors press customers to “rip and replace” their business management systems all at one go, Roche says.
The FinancialForce strategy also includes easing communication within the community formed by a subscriber, its employees, and the subscribers’ own customers. For example, if a salesperson at a consulting firm receives a billing complaint from a client, he or she can open the billing department’s records, use a FinancialForce collaboration tool to explore the problem with a billing clerk, and share the resolution with the client.
“All of our products are built on an internal social network,” Roche says. The information exchange extends beyond in-house computers to mobile phones and other devices. “We were built social and mobile—we didn’t bolt it onto the side,” he says.
In 2014, FinancialForce expanded its workforce to more than 450, an increase of more than 80 percent from the 250 employees it had at the end of the 2013 fiscal year. It’s still hiring. Its current headcount is 525, and that could reach 750 by the end of the year, Roche says.
In addition to its San Francisco headquarters, the company has offices in Manchester, NH, and in the United Kingdom, Canada, Spain, and Australia. Another U.S. office is being opened in Chicago.
Roche says FinancialForce will continue to focus on companies that offer skilled professional services such as consulting, architecture, and construction. “That potential customer base is very broad,” he says. “We’re happy targeting the spaces that we’re in.”
Although software for other business functions such as marketing have migrated to Web-based apps more quickly, back office operations are now following the same path to the cloud, Roche says.
“We can help by making these applications more modern and intuitive,” Roche says.