Zuora Raises $115M to Help Cloud Service Models

Subscription management platform company Zuroa, whose X-as-a-Service offering helps cloud and hosted services transform and manage billing, has raised another $115 million as the startup approaches a $1 billion valuation. That brings total funding to $250 million, ushering in chatter about an IPO potential.

A veritable “who’s who” of investors in this space participated in this latest round: Benchmark Capital, Greylock Partners, Redpoint Ventures Index Ventures, Shasta Ventures, Vulcan, and New World Capital. SaaS trailblazers such as Salesforce.com CEO Mark Benioff and Workday co-founder Dave Duffield also contributed.

This broad interest illustrates a trend toward a services economy that is touching every part of the technology landscape. Traditional upfront costs and maintenance fees are increasingly being replaced with cloud service models across the board, resulting in a shift toward subscription or utility-based billing.

Zuora certainly hit the scene at the right time. Founded in 2007, it was an early play in the cloud world that fixed a very real problem: How do you run a business when revenue comes in over a period of time instead of upfront? In addition to technical hurdles, there were and continue to be business model hurdles.

Consumption- and subscription-based pricing means more invoices, more varied invoices and more time-consuming accounting. Zuora’s aim is to alleviate some of the burden.

"The subscription economy is permeating every industry—entertainment, technology, healthcare, manufacturing with IoT, consumer products, everything," said Tien Tzuo, Zuora co-founder and CEO, in a press release. "Customers are now subscribers, and the new way to acquire, bill, and nurture customers is through monetizing subscriber relationships."

Early entrant and competitor, eVapt, also developed a cloud billing solution called Sure!, a Magnaquest product.