ATLANTA, Dec. 21, 2020 /PRNewswire/ — OneTrust, the largest and most widely used privacy, security, and data governance technology platform, today announced a $300 million Series C funding round. The funding values OneTrust, founded in 2016, at $5.1 billion and brings the company’s total money raised in the last 18 months to $710 million. TCV signed on as a new investor and led the round, joined by OneTrust’s existing investors, including Insight Partners and Coatue.
Watch the video: Kabir Barday, CEO and Blake Brannon, CTO, discuss OneTrust’s growth to a $5.1 billion-valued leader in privacy, security, and governance
OneTrust’s technology sits as the epicenter of trust for organizations, enabling strong privacy, security, data governance, and ethics and compliance practices that underpin their digital transformation. As organizations strive for increasing levels of efficiency and agility in their transformation journey, they are looking for a platform approach to managing privacy, security, and governance requirements across an increasingly complex regulatory environment.
Today, 7,500 organizations, including more than half of the Fortune 500, use OneTrust’s technology to comply with the world’s privacy, security, and compliance requirements, including GDPR, CCPA, LGPD, ISO 27001, NIST, DOJ Guidelines, and hundreds of other laws and frameworks. The list of regulations an organization must comply with continues to rise. In 2020, sweeping privacy laws came into effect in California, Brazil, and others, and Gartner predicts 65% of the world’s population will be covered under modern privacy regulations by 2023, compared to just 10% today.
OneTrust has pioneered a true platform approach to trust with its modular products that are built on a single code-base and have been awarded 130 patents. Product offerings include:
OneTrust Privacy – Privacy Management Software
OneTrust DataDiscovery™ – AI-Powered Discovery and Classification
OneTrust DataGovernance™ – Data Intelligence Software
OneTrust PreferenceChoice™ – Consent and Preference Management Software
In less than 18 months, OneTrust raised $710 million in funding. Since its founding in 2016, OneTrust has grown to the largest and most widely used privacy, security, and governance technology and achieved the #1 spot on the 2020 Inc. 500 list of fastest-growing private companies.
No. 1 most widely adopted consent management platform (CMP) for five consecutive quarters according to Kevel (formerly Adzerk)
“Our mission is to build the technology platform that creates the trust fabric of an organization, while addressing the hundreds of privacy, security, and compliance requirements they are faced with today,” said Kabir Barday, OneTrust CEO and Fellow of Information Privacy. “We were excited when TCV approached us for an investment. Even with most of our previously raised funds still available, their partnership allows us to further accelerate our mission, leverage our capital and currency to drive organic and inorganic growth, and deliver for our customers and partners long term.”
“Consumers and regulators are demanding that every company on the planet comply with complex and ever evolving privacy regulations,” said Tim McAdam, General Partner at TCV. “There are hundreds of regulatory initiatives in the works emanating from all major countries. OneTrust has emerged as the runaway SaaS leader in the trust and privacy arena. Kabir and his team have built the only truly global privacy platform allowing companies at any stage or size to own their privacy initiatives and remain compliant. TCV is honored to partner with such a rapidly growing and category-defining company led by an outstanding team of innovators.”
OneTrust, OneTrust DataDiscovery, OneTrust DataGovernance, and OneTrust PreferenceChoice are registered trademarks or trademarks of OneTrust LLC or its subsidiaries in the United States and other jurisdictions.
About OneTrust OneTrust is the #1 fastest growing and most widely used technology platform to help organizations be more trusted, and operationalize privacy, security, data governance, and ethics and compliance programs. More than 7,500 customers, including half of the Fortune 500, use OneTrust to build integrated programs that comply with the GDPR, CCPA, LGPD, ISO 27001, NIST, DOJ Guidelines, and hundreds of other laws and frameworks.
The OneTrust platform is powered by the OneTrust Athena™ AI and robotic automation engine, and our offerings include:
OneTrust Privacy – Privacy Management Software
OneTrust DataDiscovery™ – AI-Powered Discovery and Classification
OneTrust DataGovernance™ – Data Intelligence Software
About TCV Founded in 1995, TCV provides capital to growth-stage private and public companies in the technology industry. TCV has invested over $14 billion in leading technology companies and has helped guide CEOs through more than 125 IPOs and strategic acquisitions.
TCV’s software investments include Alarm.com, Altiris, Ariba, Avalara, ExactTarget, ETQ, FinancialForce, Genesys, IQMS, OSIsoft, Oversight, Silver Peak, Sitecore, SMT, Splunk, Vectra, and many more. TCV is headquartered in Menlo Park, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, please visit http://www.tcv.com.
1IDC, Worldwide Data Privacy Management Software Market Shares, 2019: OneTrust Dominates the Competition, Doc # US46214219, April 2020
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
Spryker, a fast-growing commerce technology for global enterprises, today announced that it has raised over $130 million in a Series C financing round, led by Silicon Valley-based TCV. Existing investors One Peak from London and Project A Ventures from Berlin also participated in the round.
The funding will be used to expand Spryker’s proven B2B and Enterprise Marketplace products and create a compelling 3rd party technology AppStore. Spryker also intends to grow its international footprint with a focus on the U.S., which already accounts for 10% of its annual software revenue. With $7 billion in annual spend, the potential in digital commerce software is massive — and Spryker is rapidly increasing its market share. Spryker also intends to grow its global talent to maintain its innovative edge and continue to build new products for future use cases and touch points, including IoT commerce, subscription, and click & collect.
Used by over 150 global customers, Spryker accelerates the deployment, time-to-value, and transformation towards transactional business models beyond e-Commerce, retail, and desktop. These benefits stem from Spryker’s innovative headless and API-based architecture, combined with a modular packaged business capabilities (PBC) design. The cloud native PaaS (Platform as a Service) delivery model empowers sophisticated businesses that have outgrown SaaS (Software as a Service) and on-premise single tenant models. As more companies shift to become “composable enterprises“ led by multidisciplinary “fusion teams”, Spryker is at the forefront of this movement having pioneered and predicted these approaches.
Founded in 2014, Spryker has been growing its recurring revenue more than 100% annually. The global team counts more than 250 employees with over 35 nationalities, working out of offices in Germany, USA, U.K., Netherlands, and Ukraine. Spryker recently pioneered a “New Work” model, offering remote first options for talent worldwide. Spryker is expanding operations in the U.S. in early 2021 to continue its rapid growth and support global customers, such as Ricoh, Siemens, and Toyota.
Spryker was named the most innovative and visionary of all new vendors in the Gartner Magic Quadrant for Digital Commerce, recognized as a major player in B2B e-Commerce by IDC, and has partnered with leading global software integrators.
Boris Lokschin, Co-Founder & CEO at Spryker Systems said:
“With more industries beyond traditional retail building transactional business models we enable our global enterprise customers at any touchpoint. Verticals like Food & Beverages, Manufacturing, Services or FMCG transform to become composable enterprises and demand for cloud native, modular commerce technologies to power their sophisticated B2B, Enterprise Marketplace, or Unified Commerce initiatives. They want the platform to respond to digital best practices and enable shorter time-to-value, better TCO, and faster innovation which always was Spyker’s DNA. With TCV we are happy to have one of the most reputable global growth funds joining us to support our global, U.S.-centric expansion as well as groundbreaking product roadmap.”
Gopi Vaddi, General Partner at TCV who will be joining Spryker’s board of directors, said:
“We at TCV are pleased to partner with Boris, Alex, and the team at Spryker in their effort to provide a modern commerce platform that revolutionizes the deployment model with packaged business capabilities. With the acceleration of the digital adoption curve in the global pandemic, there has never been a better time for customers to rethink their digital commerce strategy.”
Bob Burke, Venture Partner at TCV, said:
“Digital commerce is a strategic priority for enterprises operating across consumer (B2C), business (B2B), direct to consumer (D2C) and marketplaces. Spryker offers a next-generation solution with a modular, API-first solution that is extensible with the ever-changing business & technology needs of enterprise organizations. We look forward to supporting the Spryker team as they expand internationally and empower businesses in their digital transformation.”
David Klein, Co-founder and Managing Partner at One Peak, said:
“Similar to how Hybris and Demandware led the first wave in commerce infrastructure software solutions, Spryker is now leading the way with a best-of-breed, highly scalable cloud platform which drives sales for its customers. Boris, Alex, and the Spryker leadership team have done an outstanding job in hyperscaling the Company to a global leader in the past three years since our investment, and we are thrilled to continue to support their expansion into the US and beyond.”
Florian Heinemann, General Partner at Project A Ventures, said:
“Since its founding in 2014, we have been excited about Spryker’s development and growth. We are confident that with this new funding and the world-class team, they will become one of the global leaders in e-commerce software. New transactional business models require innovative technical implementation and Spryker is the best solution we know of to do this. For many companies with sophisticated business models, Spryker is the right partner, especially in B2B and marketplaces.”
Oscar Jazdowski, Co-General Partner at SVB, global banking Partner of Spryker said:
“SVB is excited to be part of Spryker’s growing success story. We are extremely impressed by the management team and are convinced that their commerce solutions are building the backbones of today’s enterprises. We are confident that Spryker will successfully scale globally, and we are pleased to provide support with funding and expertise across Spryker’s core markets in Germany, EMEA, and the U.S.”
With $130 million raised in this round, Spryker’s company value exceeds $500 million which makes it one of the fastest growing enterprise commerce software companies ever.
Founded in 2014, Spryker enables companies to build transactional business models in B2B, B2C, and Enterprise Marketplaces. It is the most modern platform-as-a-service solution with a headless architecture that is cloud-enabled, enterprise-ready, and loved by developers and business users worldwide. Spryker customers extend their sales reach and grow revenue with a system that allows them to increase operational efficiency, lower total cost of ownership, and expand to new markets and business models faster than ever before. Spryker solutions have empowered 150+ companies to manage transactions in more than 200 countries worldwide. Spryker is trusted by brands such as Toyota, Siemens, Hilti, and Ricoh. Spryker was named the most innovative and visionary of all new vendors in the Gartner Magic Quadrant for Digital Commerce and named a major player in B2B e-Commerce by IDC and is the only commerce platform to provide full B2B, B2C, D2C and Marketplace capabilities out of one stack. For more information about Spryker please visit Spryker.com.
Founded in 1995, TCV provides capital to growth-stage private and public companies in the technology industry. Since its inception, TCV has invested over $14 billion in leading technology companies, including more than $2 billion in fintech, and has helped guide CEOs through more than 125 IPOs and strategic acquisitions.
TCV’s investments include Airbnb, AxiomSL, Dollar Shave Club, ExactTarget, Expedia, Facebook, LinkedIn, Netflix, Nubank, Payoneer, Splunk, Spotify, Strava, Toast, Xero, and Zillow. In Europe, TCV has invested over $2 billion in companies including Believe, Brillen.de, FlixMobility, Klarna, Mollie, Perfecto, Redis Labs, RELEX Solutions, Revolut, RMS, Sportradar, The Pracuj Group, and WorldRemit. TCV is headquartered in Menlo Park, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, visit https://www.tcv.com/.
About One Peak:
One Peak is a growth equity firm investing in technology companies in the scale-up phase. The firm provides growth capital to exceptional entrepreneurs with a view to transform innovative and rapidly growing businesses into lasting, category-defining leaders. In addition to Spryker, One Peak’s investments include HighQ, Neo4j, DocPlanner, Keepit, Concentra Analytics, Quentic, Coople, DataGuard, Pandadoc, and Brightflag. To learn more, visit http://www.onepeakpartners.com.
About Project A: Project A is one of the leading venture capital companies in Europe, with offices in Berlin and London. In addition to $500 M in assets under management, Project A provides its portfolio companies with a wide range of operational support services. This includes more than 100 employees from key areas such as software engineering, business intelligence, marketing, recruiting, and many more. In 2020 Project A was named Germany’s best VC by Business Insider magazine. Project A was founded in 2012 and since then has supported more than 60 start-ups in 12 countries. The portfolio includes companies such as Catawiki, WorldRemit, Homeday, Spryker, sennder, KRY, Trade Republic, and Voi.
For over 35 years, Silicon Valley Bank (SVB) has helped innovative businesses, enterprises and their investors move bold ideas forward, fast. Through its various locations in international innovation centers, SVB offers clients targeted financial services and expertise. No other bank in Germany focuses solely on the innovation economy. Europe’s leading technology and life science businesses, in all stages of development, look to SVB’s niche expertise, experience and unparalleled network, as they grow at home and tackle new markets abroad. Learn more at svb.com/Germany.
For more information about Spryker please visit Spryker.com.
Revenue is the lifeblood of any business, yet sales planning in a fast-moving tech world is easier said than done. It includes art and science: to succeed, sales leaders need to be both, creative executers and analytical thinkers. New competitors can launch into your markets more easily than ever, while SaaS business models are making it harder to land and expand enterprise-wide contracts. In this timely episode of Growth Journeys, long-time B2B sales leader Mark Smith (NetScreen, Infoblox, Arista, Rubrik) shares veteran advice on sales planning with Kunal Mehta, a principal in TCV’s Portfolio Operations team. Key take-aways include basing near-term forecasts on long-term fundamentals and applying the power of propensity models to predict sales success. Mark and Kunal also explore the secrets of hiring and motivating successful salespeople, why technology is changing the sales cycle, and how to think about 2021:
Using shared data and definitions to integrate sales planning and execution
Leveraging sales recruiting for business development
Aligning engineering and marketing in support of sales plans
Why the pandemic is a tailwind for tech companies
How the SaaS model gave birth to customer success management
For all this and much more, settle back and press play.
More than ever, enterprise data is distributed, siloed, and increasing in volume. In order for companies of every industry to maximize and leverage the power of this data, Redis Labs is delivering a real-time data platform that allows them to manage, process, analyze, and make predictions, that will improve their customer experiences and drive their business forward.
“This investment will enable us to meet the surge in demand from companies representing every market and geography, to scale their Redis deployments and to help them win in the data-driven economy,” said Ofer Bengal, Co-Founder and CEO at Redis Labs. “The unprecedented conditions brought on by COVID-19 have accelerated business investments in building applications that require real-time, intelligent data processing in the cloud. During this time, Redis has become even more critical to our customers, partners, and community. We will continue to invest in strengthening our community footprint, advancing the Redis technology, and helping our users to do more with Redis.”
“Redis has become the ideal database for companies to operate intelligently and win in the current economy,” said Enrique Salem, Partner at Bain Capital Ventures. “We’ve long believed in the market opportunity for a high-performance database in the cloud-era and Redis’ potential to lead this category. Since our initial Series A investment, the Redis team has done a remarkable job making Redis an essential tool for developers and being a trusted partner for global enterprises operating at scale. We’re thrilled to continue partnering to build a multi-billion dollar database company.”
“We, at TCV, are delighted to partner with Ofer, Yiftach, and the team at Redis Labs in their effort to revolutionize the high-performance database industry,” said Gopi Vaddi, General Partner at TCV. “The product leadership demonstrated by Redis Enterprise in low latency, distributed, and high availability use cases is particularly remarkable. We believe that applications demanding Redis Enterprise’s market-leading capabilities will continue to multiply in an increasingly real-time world.”
Redis Labs currently has more than 7,500 customers, including MasterCard, Dell, Fiserv, Home Depot, Microsoft, Costco, Gap, and Groupon. With this funding, Redis Labs will continue to grow the global Redis community, expand its go-to-market team and programs, and invest in the product and support services to deliver even more value for customers. In calendar 2020 Redis Labs has seen tremendous momentum to-date, including:
Signed a strategic alliance agreement with Microsoft Azure for making Redis Enterprise the top tier of Azure Cache for Redis, and launched it in Private Preview. Public Preview is expected in early fall.
Following the availability of Redis Enterprise Cloud as a native service on Google Cloud in October 2019, the service has experienced over 300% growth in just two quarters.
Achieved Advanced Technology Partner status with Amazon Web Services Partner Network.
Launched RedisAI, for inferencing artificial intelligence requests at the speed of Redis, and RedisGears, a programmable engine enabling data-processing options at milliseconds speed across any distributed Redis deployment.
Announced RedisRaft, which brings strong consistency to Redis, making it suitable to serve the most critical business applications on earth.
Named “Most Loved Database” for a fourth consecutive year in Stack Overflow’s annual global developer survey.
About Redis Labs
Data is the lifeline of every business, and Redis Labs helps organizations reimagine how quickly they can process, analyze, make predictions with, and take action on the data they generate. As the home of Redis, the most popular open source database, we provide a competitive edge to global businesses with Redis Enterprise, which delivers superior performance, unmatched reliability, and the best total cost of ownership. Redis Enterprise allows teams to build performance, scalability, security, and growth into their applications. Designed for the cloud-native world, Redis Enterprise uniquely unifies data across hybrid, multi-cloud, and global applications, to maximize your business potential.
OSTON–(BUSINESS WIRE)–Toast, the fastest-growing restaurant management platform in the U.S., today announced a $400M Series F funding round led by Bessemer Venture Partners, TPG, Greenoaks Capital, and Tiger Global Management with participation from Durable Capital Partners LP, TCV, funds and accounts advised by T. Rowe Price Associates, G Squared, Light Street Capital, Alta Park Capital, and others.
Focused on empowering restaurants of all sizes to compete on a level playing field with global brands, Toast has quickly become the go-to partner for the restaurant industry, from entrepreneurs opening their first restaurant to enterprise brands scaling across hundreds of locations. During the course of 2019, revenue increased 109 percent as tens of thousands of new restaurants joined the Toast community.
“As a result of our tremendous growth and commitment to the restaurant industry, we have continued to see a significant amount of demand from the investor community,” said Chris Comparato, CEO at Toast. “As the clear platform leader in the restaurant space, we are excited to use this investment to extend our capabilities and drive a bigger impact for the restaurant industry.”
Toast will invest proceeds from this fundraise into its technology platform to meet the evolving needs of the restaurant industry including:
New products designed to both deepen restaurateurs’ connections with guests and increase restaurant revenue;
Hardware and software investments to increase speed of service, streamline the guest experience, and reduce operational costs;
Capabilities to improve the restaurant employee experience, reduce employee turnover, and address the industry’s pressing labor challenges; and,
Financial products that provide quick and reliable access to funding to help restaurateurs grow their businesses.
“Just as the retail industry weathered disruption from e-commerce over the past two decades, restaurateurs now face shifting consumer expectations and a changing landscape of tech players who threaten to erode restaurant brands,” said Kent Bennett, partner at Bessemer Venture Partners. “Toast wants to partner with the restaurant community to level the playing field and strengthen this nearly trillion dollar industry. We’re thrilled to continue to support this incredible team in 2020 and beyond.”
Restaurant owners and operators can learn more about Toast and schedule a personalized demo here.
About Toast Launched in 2013, Toast is democratizing technology for restaurants of all sizes. Built exclusively for restaurants and driven by a passion to enable their success, Toast connects employees, operations, and guests on an easy-to-use platform so restaurateurs can stay one step ahead of a rapidly evolving hospitality market. Tens of thousands of restaurants partner with Toast to increase revenue, streamline operations, retain great employees, and create raving fans. Toast was named to the 2019 Forbes Fintech 50, 2019 SXSW Interactive Innovation Finals, and 2019 Forbes Cloud 100. Learn more at www.pos.toasttab.com.
opportunity comes competition, both from within one’s category (e.g.
application area) or from adjacent categories within one’s vertical (e.g. industry).
As boards and management teams wake up to the opportunity, they realize that
the race is on to capture the full potential of their vertical.
This post is
a framework to help leaders of SaaS companies think through the strategic
choices and hopefully increase the odds of reaching their full potential.Strategy
is implemented by focused alignment of execution, talent, M&A, organizational
structure, functional excellence, and financial and governance/board frameworks.
I hope to write about these supporting pieces over time, but I wanted to start
with strategy first.
think it’s important to acknowledge that very few companies have reached “full
potential,” and this framework is
inherently aspirational. However, “most entrepreneurs aren’t building a house,
they are putting bricks in the foundation of a skyscraper” (Naval Ravikant). Aspiration is important, so
hopefully this is an articulation of what is possible.
of the SaaS strategy is well understood so I won’t spend much time on it. A
SaaS company aspires to:
build a great product (and service)
over time, build an efficient and repeatable
go-to-market model (marketing -> sales -> onboarding)
and then “add capital” and execution
to press its advantage against sluggish incumbents or poorly capitalized
This is the
playbook that Omniture and our portfolio company ExactTarget pioneered a decade ago. Despite
massive capital inflows into SaaS and deteriorating economics, this model
generally still works today.
On the product side, scale
in data + AI can create increasing differentiation. For example, when you start
to have more data than anyone else, you can flip your product from being
reactive to proactive — having the product tell users where to look and how to
optimize the system. Both Xero and Shopify have done this well.
Five other things
to think about in this early phase that don’t get enough attention:
Scalable onboarding: Onboarding friction can be unaccounted
drivers of CAC and churn. A great onboarding process builds the trust and
confidence that are the foundations of virality/word of mouth, future cross- as
well as third party channel strategies. Carefully measure funnel metrics and be
attentive to new customer NPS. Automate early as “throwing bodies at it” can
create process debt that will be difficult to unwind later.
Expansion: Expansion drives net revenue
retention and most of the strategies we are about to discuss. With all sales
processes, it’s a lot easier to learn, iterate, and optimize with fewer bodies
and less complexity.
UI and Architecture: Like onboarding, these can be long-lead
time fixes that compound as your business scales and gets more complex. A
specific call out is to plan for an API strategy. It can facilitate future
partner strategies and increase the value and stickiness of your offering.
Pricing structure/strategy: You will constantly revisit tactics,
but it’s important to have some sense of how your pricing structure might change
Foundations for global, including a work culture that can
support distributed executives and operations, and good product feedback loops that
incorporate non-home market needs.
Hyperscale Locations, Feed
A lot of ink
has been spilled on forward investing in sales and marketing, and arguably it’s
part of a/the “lead the category” strategy. But, it’s worth a call out as it’s
important you don’t take your eye off the ball too early. So much of winning and
future monetization is getting location market share. When the wind is at your
back, go get it done! Market structures have a nasty habit of shifting, future
secular tailwinds may abate, or competitors may leapfrog your product or your go-to-market
model. If your churn and sales economics are sound, keep “feeding the beast!”
particularly powerful unlock is Channel. There are verticals and
categories, where influencers in a channel are kingmakers and can help you
engage with segments that are otherwise difficult or uneconomical to
reach. Furthermore, Channel partners’
engagement and contributions can enrich your products and increase overall
customer value. A great example is in tax software, where Xero’s wooing of accountants proved to be
an effective source of customers and a formidable competitive moat (thereby
disrupting the incumbent provider). Xero went as far as offering free practice
management tools to help accountants run and grow their business on Xero.
Win the Control Points:
Own Your Vertical
where management teams are faced with a paradox of choice: “Where should we go
next? How should we spend the next incremental dollar? On increasing ARPU, acquiring
incremental locations, or expanding into new verticals, geos or segments?” At
this juncture, it is my belief that you should focus on winning the control points. In vertical SaaS, there are
typically one or two control points, “systems of record.” Usually one control
point in the front office (e.g. Point of Sale, CRM, e-commerce) – “that drives sales,
that grows the business, that serves as the cash register.” And one control
point in the back office (e.g. general ledger) – “where everything else
reconciles to.” Hopefully, you provide one of the systems of record, so go
build or acquire the other system(s) of record and secure the high ground!
a system of record is the last software package a customer will “turn off” in a
tough economic time.
I also like
to think about the concept of “gravity”:
gravity – the system that all other systems integrate to – it’swhere the most users spend the most time. Not all workflows
deliver the same value; in my experience the system of record workflow tends to
deliver the most value.
gravity – the system that creates and holds the most critical information and is the
hardest to migrate. That data can be critical to a client for a wide range of
applications, from understanding their customers (e.g. CRM) to managing risk
(e.g. compliance). Data also can be critical in two-level situations, such as
loan underwriting (e.g. a bank underwriting a merchant’s risk via POS data) or
supplier information management (e.g. a client managing risk by validating
supplier capabilities and quality). Data depth and scope also create gravity
where AI technologies can be highly productive.
the user/sponsor of the system is the highest-ranking individual in the customer
organization; it’s the system that requires the biggest financial outlay, etc.
other system of record is not easy. By definition, a system of record is hard
to displace and unless the market is greenfield pen and paper, competition can
be challenging. You may be able to do it organically with product innovation,
but M&A can be the more desirable path if “integration debt” is manageable.
If M&A is not possible, a slow winnowing of your competitor may be the only
approach available to you.
If you own
multiple systems of record in a vertical, the benefits are enormous:
Customer delight: automation from integrated
workflows and potentially unified data and data models allow efficiencies and
offerings unavailable before
Stronger account ownership
to capture incremental spend and drive more efficient growth
A new level of
durability and stickiness
A good example
is Veeva. The company started in 2007 with the launch of a CRM
and a sales automation platform for pharma sales reps (e.g. record their
activity, keep track of the doctors they meet with or drop off samples for, etc.).
After becoming the dominant player in that category, Veeva saw an opportunity
to move backward into research and
development for their life science customers (developing new drugs,
conducting clinical trials and bringing those drugs to market). In 2011 Veeva
launched Vault, a suite of applications that first centered on the core content
management needs for clinical trials, regulatory submissions, and quality
documentation. The company then expanded to include a series of core data
applications that help manage clinical trials, quality processes, safety processes, etc. Veeva is expected to
finish 2019 with $1.1B in revenue (26% YoY Growth) and 37% EBIT margins. Vault
represented 51% of total revenue and grew 38% YoY. Analysts also estimate Vault
meaningfully expanded Veeva’s addressable market.
example might be front office player Shopify’s $450M acquisition of 6 River
Systems to move into back office fulfillment and warehouse management. Some
financial analysts estimate that merchants spend up to ~10-15% of their GMV on
logistics which could potentially provide multiples of Shopify’s current take
category leadership comes high market share and potentially high saturation. Long-term
growth is driven by location growth, as there’s generally a finite share of
wallet you can access. It’s important to invest in the S-curves of geos,
segments, and adjacent verticals that can unlock new location TAM. This can
take a couple of tries before you’re successful, so start this during your growth
phase when there’s less pressure on maximizing profitability.
Extend Through the Value
of growth can be transformative. By leveraging the strengths of your core
customers, you can expand into a new market with a new set of customers. Typical
patterns include moving from front office software to extend to your customer’s
customers, or from back office software and extending to suppliers. These can
be riskier bets, but success can pay out big here:
Workflow that spans multiple parties and
creates increased customer value and vendor stickiness
Two-level network effects
seems to work best by “following the money” and leveraging purchasing power. TCV
portfolio company Ariba articulated the “golden rule”— He
with the gold rules! By using their leadership in procurement software at large
corporate buyers, Ariba extended to build a robust suppliers software business
for merchants that serviced those corporate buyers. More recently, Avetta has followed a similar path in the
supplier information space by building a strong two-level network effect. We
believe corporate clients want to be on Avetta because it has the largest
network of suppliers, and suppliers want to be on Avetta because it has the
most corporate clients. Avetta’s advantage gets stronger as it scales. Moreover,
Avetta has an opportunity to help suppliers do more than just manage compliance
information. As a result, Avetta sees growth in helping suppliers grow and
operate their business.
CCC is on the third generation of this approach. They started by
serving large auto insurance carriers and then extended into autobody repair shops
that serve the carriers. CCC is now in the process of expanding to parts
suppliers. By getting all the key constituents on its software platform, CCC is
able to leverage AI and automation to massively reduce friction and provide a
great customer experience across all steps of the auto insurance process.
opportunity is similar to the supplier opportunity in terms of “following the
money.” Companies can use integrated payroll or time & attendance offerings
to establish a relationship with the employee. Employees are also consumers who
represent significant B2C opportunities such as consumer lending, insurance,
etc. There are big dollars here, but perhaps less opportunity to build significant
consumer/demand opportunity is the white whale. We believe that SaaS companies
tend to capture ~ 50-100bps of GMV for software subscription, whereas online
demand channels can take 15-20% of GMV in categories such as hotels and
restaurants. In addition to the massive revenue opportunity, Consumer also represents a strategic
flank worth monitoring carefully. Online marketplaces have large competing
salesforces that engage with your merchant customers and have strategic
interests encroach on the software layer to try to control supply. Booking.com bought Buuteeq and Hotel Ninjas to
vertically integrate into hotel supply. Uber is rapidly expanding its driver
offering to over-draft protection, a debit card, and likely lending over time
to manage driver churn. This is another example of increasing marketplace + SaaS convergence.
derivative Consumer monetization
Consumer pay:FareHarbor approaches tour and activity
operators with a free to merchant, consumer pay model: “We’ll build your
website and booking engine for free, with no work on your part; you just pay us
for payment processing and the customer will pay us a booking fee.”
Channel management:SiteMinder offers
channel management to help hotels manage existing channels in real time. SiteMinder
has extended that value proposition to “Demand Plus,” an offering that helps
hotels easily expand into new channels to scale demand.
Existing customers: While 15-20% marketplace take rates may
be sensible for new customer acquisition/discovery, companies such as Olo are looking to move existing
customers to lower cost channels through their dispatch offering while taking a
much lower percentage of GMV.
Customer Co-opt: By seeing consumer data pass through
their systems, some SaaS vendors are building consumer profile databases that
they might monetize over time. In the recruiting market, we’ve seen players
leverage job distribution tools to build a candidate database. Shopify
similarly has built a large shopper profile database across all their
merchants. While Shopify hasn’t monetized directly, the uplift in conversion
rate is likely significant. This model is the most capital efficient but can create
conflicts with the vendor’s core merchant customers.
benefit of extending through the value chain is that it gives you a
beachhead and a right to win in a new vertical to start the “full potential”
growth cycle again. As you do this, it’s important to reconsider your end
market and focus. When Ariba transitioned from procurement software to supply
network, they started to represent a front office “system of record” for their
suppliers. In doing so, Ariba was both a large enterprise “procurement company”
and an SMB “supplier enablement company.” The question was: “Which priority
should dominate?” When extension leads to conflicts, there are no easy answers.
As such, it is important to acknowledge that this growth strategy is ever-evolving.
In winning the key control points,
for the same reason a single system of record has a lot of “gravity,”
you now have an even stronger opportunity to turn your product into a channel. This
enables entry into adjacencies with data, workflow, and account ownership
advantages for you as well as for the end customer. The most extreme example is the “platform/ecosystem”
play, where you monetize third party vendors that want access to the channel your
product has become (e.g. Salesforce, Intuit, Shopify). However, most commonly a SaaS
vendor will pursue additional monetization with in-house or white-labeled
consideration in prioritizing adjacent function/monetization is consistency
with your core go-to-market channel and proximity to key decision makers. Go-to-market
will determine the financial leverage of the cross-sell and often the overall
success. The core advantage of SMB software here is that often the
decision-making is relatively consistent and concentrated across software
vertical is different, but there are some common functionality/monetization
patterns emerging. Each of these patterns deserves its own write-up, but for the
sake of brevity here are some highlights:
“Integrated payments -> integrated banking”: The attachment of payments to SaaS has been well covered. That trend is expanding to the attachment of integrated banking. I had an opportunity to interview two of the smartest people in the business, Tim Barash and Jackie Reses. Square is out front here with broad based merchant and consumer plays. To understand the magnitude of the opportunity, Square’s Subscription & Services (most of which are financial services) are expected to reach $1.3B in 2020. This represents 23% of 2020 total GAAP revenue and 47% of 2020 Total Gross Profit (incremental gross profit is ~90%). Brex is earlier in its progression, but we’re excited to see how the company leverages its initial corporate card and expense management offerings to extend into broader financial services.
“Follow the workflow”: At times SaaS companies have
actually observed customers at work or mapped out the physical sites to
understand all the areas their workflow touches as areas of expansion.
“TAM shark”:HashiCorp CEO
David McJannet describes expansion as “TAM Shark,” constantly circling the
biggest, fastest growing (most change/opportunity) markets. He requires product
managers to report on market size and growth of all adjacent categories to make
sure they are focused on the biggest opportunities. Generally, over a 2-3 year
period companies have one, maybe two opportunities to build distinct add-on
businesses. Make sure you’re picking the biggest markets and therefore the
typical SaaS playbook is “Lead the Category” and “Hyperscale Locations,”
clearly the full potential for vertical SaaS players is dramatically larger
than conventional SaaS wisdom would suggest. We’re excited to work with — and
hopefully invest in —the frontier players as they explore the “Full Potential
If you found
this useful, let me know, and we’ll continue to publish and explore the topic. I
look forward to hearing your adds, edits, and challenges.
There’s a tension between aggregating as big a profit pool as quickly as possible vs. “winning the market.”
This framework is characterized as a sequential strategy. In reality, most companies are pursuing multiple steps concurrently, and the sequence is more a reflection of prioritization.
Time horizon: this approach is a long-term strategy to winning, which may often be at odds with short-term maximization of valuation multiple and financial performance.
This approach is informed by a U.S./western/mature approach. In emerging/more greenfield markets, less focus and value chain expansion earlier in company development may make sense.
views and opinions expressed are those of the authors and do not necessarily
reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not
verified the accuracy of any statements by the authors and disclaims any
responsibility therefor. This blog post is not an offer to sell or the
solicitation of an offer to purchase an interest in any private fund managed or
sponsored by TCV or any of the securities of any company discussed. The
TCV portfolio companies identified above are not necessarily representative of
all TCV investments, and no assumption should be made that the investments
identified were or will be profitable. For a complete list of TCV investments,
please visit www.tcv.com/all-companies/. For additional
important disclaimers regarding this document, please see “Informational
 See TCV’s SMB and Vertical SaaS investments at the end of the document.
TCV is delighted to announce that Gopi Vaddi, a seasoned investor with broad international experience, has joined the firm as a General Partner. Founded in 1995, TCV has invested over $13 billion in more than 350 consumer and enterprise technology companies, including $2 billion in Europe, where Gopi will be focused. TCV investments in Europe include Believe, FlixMobility, Brillen.de, RELEX Solutions, RMS, Sitecore, Sportradar, Spotify, The Pracuj Group, and WorldRemit.
Gopi is an excellent fit with TCV’s long-term strategy and
focus of investing across geographies and domains, often far from major
technology and financial hubs. He was born and raised in India, took degrees in
business administration and electrical engineering in the U.S. and India, and
has experience investing in the U.S., Europe, and Asia. Most recently, he was a
partner at Providence Equity’s growth fund, where he worked on growth buyouts
and minority investments in software and payments. At TCV, Gopi will focus on
software and software-enabled businesses covering business applications, vertical
software, digital marketplaces, and infrastructure software.
“We take as much care in adding a new partner as we do in making a new investment,” said Jake Reynolds, General Partner at TCV. “Gopi’s success springs from the same qualities that have driven TCV for nearly a quarter-century: deep domain knowledge, keen market insight, and a passionate commitment to helping entrepreneurs achieve category leadership. He also complements the firm’s broad growth-biased investment approach with expertise in software buyouts and buy-and-build investing.”
Gopi understands TCV’s approach, just as we recognize the value he has brought to his investments, including a willingness to roll up his sleeves and work side by side with management. As a citizen of the world who started his career as an engineer and data modeler, he has an innate ability to identify and partner with the next generation of category leaders and the entrepreneurs steering them.
We are thrilled to welcome Gopi to the team.
The General Partners of TCV
companies identified above are not necessarily representative of all TCV
investments and no assumption should be made that the investments identified
were or will be profitable. For a complete list of TCV investments, please
visit www.tcv.com/portfolio-list/. For additional important disclaimers regarding this post,
Dan Wernikoff rose to become an EVP at Intuit and general manager of its small business unit and consumer tax group. In both cases he scaled the business-within-a-business from small groups of early adopters to huge hordes of happy SMBs and consumers, by relentlessly measuring early indicators, leveraging core strengths, and focusing on long-term growth goals.
In this conversation with TCV General Partner Tim McAdam, he shares:
Lessons about how selling into SMB markets
differs from enterprise
The best metrics for tracking success, and
Why empathy and understanding matter more than
slick ads and sales techniques.
He also explains how to infuse human expertise
into SaaS models in a way that fits the SMB/consumer mindset.
For these insights and more, settle back and press play.
Dan Wernikoff is a former Venture Partner at TCV.
The views and opinions expressed are those of the speakers
and do not necessarily reflect those of TCMI, Inc. or its affiliates
(“TCV”). TCV has not verified the accuracy of any statements by the
speakers and disclaims any responsibility therefor. This blog post is not
an offer to sell or the solicitation of an offer to purchase an interest in any
private fund managed or sponsored by TCV or any of the securities of any
company discussed. The TCV portfolio companies identified above, if any,
are not necessarily representative of all TCV investments, and no assumption
should be made that the investments identified were or will be profitable. For
a complete list of TCV investments, please visit www.tcv.com/all-companies/. For
additional important disclaimers regarding this document, please see
The opportunity set for SaaS is on the rise. The original SaaS model that revolutionized software is now enabling SMB and vertical SaaS companies to evolve from tool companies to market makers. Pioneers of these new SaaS models not only provide a tech platform to service providers, but also strengthen their position by extending into marketplaces. When these providers aggregate enough supply, they leverage their data and mindshare advantages to create two-sided marketplaces that enjoy powerful network effects. The result is a much stronger financial profile, deeper moats, and a significantly larger TAM.
TCV recently hosted an offsite focused on emerging trends that we believe are dramatically expanding the opportunity set and economic strength of vertical and SMB SaaS companies.
We were fortunate to have Brian Rothenberg as a speaker. Before joining a leading new early stage venture firm Defy as a Partner, Brian was on the leadership team that took Eventbrite from startup through IPO – while evolving the company from a SaaS platform for event venues to a marketplace for live experiences.
In this conversation with John Burke, EVP at TCV, Brian explains the steps and structures necessary to accomplish this strategic transformation and reach scale. He also offers priceless tips on timing and managing relationships with original SaaS clients that leaders can apply as they focus on dramatically expanding their addressable markets.
To talk about SaaS opportunities and get a copy of the presentation, please contact John Burke or Katja Gagen at TCV.
We believe that many SMB and vertical SaaS companies are starting to exhibit platform characteristics. Some of these companies are beginning to build consumer and supplier networks that are dramatically expanding the SaaS model.
Toast is a pioneer in the space, powering restaurants of all sizes with a technology platform that helps them streamline operations, increase revenue and deliver amazing guest experiences. No one lights up a room on these topics more than Tim Barash, Chief Business Officer and CFO at Toast. I’m also excited to welcome Tim as an Executive Advisor to TCV, where he will be working with TCV portfolio companies and helping us to assess new opportunities.
Dave: Tim, welcome to TCV, and thanks so much for spending time to share your thoughts with us!
Tim: I am excited to be a part of the team — it’s been great to
meet with some of the founders of this incredible new class of companies,
changing the rules of what has traditionally been considered SaaS.
Dave: Tell us about Toast. What is the company today, what’s its mission, and where is it going?
Tim:Toast is a company that is transforming the hospitality industry
with an end-to-end platform, extending from a core commerce engine into guest
experience, employee engagement, and financial services. Our mission is to
empower the restaurant community to delight guests, do what they love, and
thrive. We as Toasters are very passionate about bringing this mission to life
for our customers. We launched our core offering in 2013 to the first few
restaurants and today are serving tens of thousands of customers while still
growing over 100%, with over 1,600 employees globally. It’s been a wild ride
these past five years and it’s a really fun space with a creative and diverse
Dave: You and I recently hosted an offsite on “SaaS as a Platform.” Why is Toast a platform to its restaurant customers? If you’re the CEO of a SaaS company, how do you know that you are or could be a platform?
Tim: Toast really extends all the way from
the front of house to the back of the house, bringing restaurants into the 21st
century with a cloud and mobility-first operating system, including hardware such
as self-ordering kiosks and handhelds for order & pay-at-the-table and
guest feedback. We’ve evolved from this core system of record into other high-value
offerings, including payment processing, payroll & employee management
software, credit and consumer-facing apps, and we’ve had great feedback from
our customer base that they want us to continue to solve more problems for them
between our first-party offerings and our deep partner network.
think being the Platform or System of Record generally means you
have the most mindshare and time spent on your system relative to others the
same user may have. As important is where the data
resides; in the restaurant vertical, the core data sets are menus, orders,
guest data, and employee data, whereas other verticals like doctor’s offices
might be more around scheduling, billing/invoicing, and insurance connectors. If the key personas are logging in
multiple times per day and using your tool as the system of record for their
most important data, it’s likely there are multiple platform opportunities to
exploit to make their lives even easier.
Let’s first talk about payments. Generically the opportunity in payments is for
SaaS companies to start monetizing flow through GMV. Why is this good for your
customers, the end merchant, and your customer’s customer, the merchant’s
Tim: A lot of companies are starting to integrate payments
mostly because it creates a much smoother, simpler experience for the merchant.
It starts with onboarding and spans ongoing support and easy reconciliation of
transactions and payments through the same software. Small businesses generally
do not like having to deal with multiple vendors when they can use one holistic
solution for what they are trying to get done.
What’s really compelling is what you
can do for the merchant and the end user once you have payments integrated by capturing
more data. An example is identifying the end user and better understand buying
patterns and be able to help small businesses market to their customers in a
more targeted and automated way.
There’s also very significant margin
enhancement if you can get payments right, which can fuel higher investment
levels in areas like Customer Success and R&D to deliver even more customer
value by displacing a horizontal payments vendor.
I know you could hold a master class on just payments, but quickly what are
three tips for getting started? Should you make them mandatory, or an option?
Tim: Understanding your strengths and weaknesses as a team here
is important — you can get started with a referral partnership or go full bore
and become a payment facilitator and handle all the risk, underwriting, and
merchant-facing tech. It really depends on the available talent, domain
knowledge, and capital access to get something off the ground. Once you’ve
decided what to go with, here are three tips:
Build a dedicated team that
understands your payments space at a deep level — there can be a lot of new
complexity across product, tech, risk/underwriting, pricing, go-to-market
strategy, and customer success that may look and feel different from your
existing business. Make sure at least 1-2 people are coming in with real
payments or fintech experience. Card-present vs. eCommerce experience will
likely be something to think about here.
Resist the urge to over-monetize or
make pricing overly complex — traditionally there have been some bad actors in
the payments world and, as a result, a lot of these companies have low NPS and
very high churn — great SaaS companies have the opposite, so don’t tempt fate
for a few extra basis points.
If you are doing anything other than
an arms-length referral partnership, you should be taking payments-specific
risk, fraud, and security very seriously.
Dave: Ok, so once you’ve launched payments, how would you extend next? I know it depends, so maybe talk about where you would go if you were a front office offering and a back-office offering. Or better yet, what is the prioritization framework for the different offerings?
Tim: I think the prioritization framework begins with mission —
why does your company exist and what are the biggest problems in your industry
that you have an unfair right to help solve? As an example, Toast is the source
of lots of employee data and we kept hearing from our customers that, in the
current macro environment, labor was their biggest concern, so we had both the
market need and the natural entry point to get deeper into payroll and employee
On back-of-office solutions it’s
likely things like payments, credit, payroll, insurance, and B2B/vendor
marketplaces can be interesting depending on the platform and vertical. For
front-of-house it’s likely more about CRM, marketing tools, loyalty programs,
other commerce touchpoints, and the holy grail of leveraging supply of SMB’s to
create a two-sided consumer marketplace. That said, there
aren’t many companies that have made the B2B2C transition, yet it can be a tremendous value creator.
Credit is a big step change because it involves a balance sheet and
underwriting to risk. What is your take?
Tim: I think this really depends on the execution muscle of your
company — if you’ve already gone deep on something like payments, you may have
some experience on the fraud and underwriting side, but getting into credit ups
the ante in a big way. You need to feel confident you have some really strong
players on data science, finance, and risk to go after this yourself. Starting
with a partnership with a Kabbage, Fundbox, or OnDeck could be a way to dip the
toe in the water before putting your capital at risk or trying to attract
outside investors to supply the capital for a credit offering.
If you are going after this
yourself, you will almost definitely want to find outside capital to offload
most of the risk and balance sheet implications of a credit business, both for
optics reasons with investors and because your capital is better put to use
hiring engineering, sales, etc. than lending to your customers.
Dave: How about payroll? Big dollars given the per employee model. How do you know there’s real demand for payroll? Given the 50-state nature, would you do this in-house, partner, or buy?
Tim: If I think about this space, the only software business
that didn’t have HCM/HRIS at its core that’s done this really well is Intuit,
though Square is also starting to gain traction in their new offerings. Payroll/HCM
is its own beast with its own ecosystem of products from worker’s comp and
healthcare to newer technology offerings like same-day pay and employee
management solutions. Similar to payments, capital, marketplaces, and other
platform plays, the decision on whether to extend is all about whether you have
a natural right to play. For Toast, we have restaurant employees clocking in
and out every day on our platform, and managers/owners running staffing reports
and approving hours before downloading the data and uploading to a payroll/HCM
solution. This made it a pretty natural move to solve this disjointed
experience for our customers.
If you’ve got the natural right to
play, demand is probably dependent on the complexity in your vertical — if
your customers only have 1-5 employees and not a lot of complexity around time
and attendance, they may be using an offering from Intuit through their
accounting package, or Gusto, or some other inexpensive and easy solution,
making it more difficult to displace.
In terms of build/partner/buy, this
could be a long slog to build, because of all the regulatory/compliance
elements. Depending on your scale, partnering is likely the best way to enter
into the space and learn this side of the business. Just be careful as one of
the reasons to get into payroll/HCM is that it’s a fairly sticky product.
Ok, let’s get into the next-level network effects for SaaS companies. Most two-level
networks tend to be “Big B to small B” in a buyer/supplier relationship. TCV invested
in three of them over the years. To give the theme a plug — Ariba in
procurement, CCC in the auto industry, and Avetta in supplier information management and
compliance. You sell into large company buyers and help them connect more efficiently
to smaller/SMB consumers. Winning into the big buyers gives you a strong value
proposition to small suppliers and gaining more suppliers in your network makes
you even more attractive to the big buyers. It’s a virtuous cycle.
every SaaS company, particularly vertical and SMB providers, can look to
leverage consumer, employee, and supplier networks. What’s your take?
Tim: It’s a really exciting play that is starting to develop in
SaaS. If done correctly, it can be a game changer in helping SMBs get the scale
advantages of larger enterprises and change their businesses for the better.
Let’s take supplier networks first. Who is doing a good job getting into the
Tim: I think you just hit a few of the strong players earlier. What
CCC has done with the auto parts marketplace is really exciting and a playbook
that could be run by a lot of SaaS platforms in other verticals, especially
something like construction or home services. I’ve seen a lot of startups try
to create the supplier marketplaces in industries such as dental offices,
restaurants, and others, but the standalone model can be difficult because they
aren’t starting with one side of the marketplace already built up — that’s what’s
so exciting about these platform opportunities for existing SaaS companies.
How about employees?
Tim: There are lot of interesting companies out there. For
example, SnagAjob and ZipRecruiter are working on building out the marketplace.
I think ZipRecruiter has been a really interesting story as they did leverage
existing relationship with employers to create their marketplace. Over time, I
think we will see a lot more of these models. There have been a few entrants
into the “LinkedIn of hourly workers” space, and time will tell if something
like that will be created or if more mindshare will go to vertical-specific
SaaS/Employee Network plays. It’s interesting to think about the marginal
utility of a horizontal employee network, certainly there are some generalists
in this employee population but also a lot of specialization in specific trades
Consumers is probably where the big dollars are. Marketplaces regularly capture
10-40% of GMV to deliver consumers. How
can SaaS companies partake of the consumer opportunity?
Tim: I think it heavily depends on how valuable the supply side
of the marketplace is. There are verticals including food, certain home
services, hotels, etc. where quality and user-specific preference is going to
really matter. If you have really compelling supply (especially if it is hard
to access online), you can get real leverage in building out a consumer
marketplace. If it’s something like transportation, it may be harder to have
any real edge against a standalone marketplace startup.
If you are in a position to
capitalize on a consumer network, I think creating a separate team to go after
that opportunity in a big way is likely the right way to go as so many parts of
the business will be different than your core SaaS team is used to working on. You
want the unfair advantage of owning supply without a handicap of having a team
that hasn’t built a consumer business before.
Well Tim, I know we could go on for hours on this topic. Thanks so much for
taking the time today, and great to have you as part of the TCV team. I’m
excited to work with you.
The views and opinions expressed in the blog
post above are that of the author and do not necessarily reflect those of TCMI,
Inc. or its affiliates (“TCV”). This blog post is not an offer to sell or
the solicitation of an offer to purchase an interest in any private fund
managed or sponsored by TCV or any of the securities of any company
discussed. The TCV portfolio companies identified above, if any, are not
necessarily representative of all TCV investments, and no assumption should be
made that the investments identified were or will be profitable. For a complete
list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this
TCV’s website, available at http://www.tcv.com/terms-of-use/.