The subscription model is growing in popularity as a way to monetize a service, netting in trends in SaaS, media, e-commerce and other verticals that are in search of more predictable, recurring revenues. Now, a startup built to provide a subscription platform to businesses has raised a round of funding to grow.
San Francisco and Chennai-based Chargebee has raised an $18 million Series C round to help companies manage recurring billing. The funding was led by Insight Venture Partners, with participation from Accel Partners and Tiger Global Management. Tiger previously led a $5 million Series B in 2015.
Chargebee works with payment platforms like Stripe, Braintree, PayPal, Adyen and others to help its 7,000 customers keep tabs on recurring revenue, with customers that include Okta and Freshworks as well as other businesses in digital media, e-commerce and SaaS. It also helps companies manage accounting and taxation compliance across 53 countries.
Chargebee has similarities to Zuora, which recently filed to go public. But Krish Subramanian, co-founder and CEO, tells TechCrunch that the two companies focus on different-sized customers. “Our focus on a business-user-first billing system that delivers a way to manage any exceptional billing scenario via the user interface makes us different from payment gateways as well as other billing systems.”
He also acknowledged that Chargebee competes with in-house billing solutions, but ultimately he hopes that its API integrations like those with Xero and QuickBooks help set it apart. “Just like how businesses don’t build their own CRM / help desk, we believe that businesses don’t need to build their own billing systems,” said Subramanian.
Harley Miller, vice president at Insight Venture Partners, is joining the board. They invested because they “saw a strong macro trend toward recurring revenue business models and their underlying need for flexible billing/invoicing solution not being well served.”
Subramanian is also very bullish on more businesses shifting to subscriptions. “You can see that even legacy technology businesses like SAP and Oracle are shifting towards recurring revenue model and it’s just the beginning of the shift of a $500 billion software market.”
But in competitor Zuora’s recent IPO filing, the company warned that there are no subscription market growth guarantees. “If the shift by companies to subscription business models, including consumer adoption of products and services that are provided through such models, and, in particular, the market for subscription management software, develops slower than we expect, our growth may slow or stall, and our operating results could be adversely affected.”
The funding round brings Chargebee’s total raised to $24.7 million since it was founded in 2011.