Alibaba and Twitter backer makes first-ever India bet

Chargebee co-founders (from left) Rajaraman Santhanam, Thiyagarajan. T, K.P. Saravanan, and Krish Subramanian / Photo credit: Chargebee

Growth-stage venture capital and private equity firm Insight Venture Partners, an investor in several high-profile software-as-a-service (SaaS) companies like Shopify, NewRelic, and Wix, today revealed its first investment in India: subscription billing software-maker Chargebee.

The New York-based investor led Chargebee’s US$18 million series C round of funding, in which existing investors Accel Partners and Tiger Global Management participated. Insight, which has raised over US$18 billion in capital, has invested in more than 300 companies worldwide, including Hootsuite, Flipboard, Twitter, JD, and Alibaba. Chennai-based Chargebee caught its eye at the SaaStr conference in San Francisco a year ago.

Analysts from Insight referred a few of their portfolio companies as prospective customers for Chargebee. “They used our product, were happy with it, and that was a good way for the fund to validate us,” Krish Subramanian, co-founder and CEO of Chargebee, tells Tech in Asia.

“As a firm, we are long on recurring revenue businesses. Chargebee is poised to capitalize on this trend,” Harley Miller, vice president at Insight, who will be joining the Chargebee board, said in a press announcement.

While the earlier funding rounds for Chargebee were more of a bet on the subscription billing market and the founders, the latest is based on the company’s growth metrics, Subramanian shares. That’s something he and his co-founders – Rajaraman Santhanam, K.P. Saravanan, and Thiyagarajan T. – are proud of.

Founded in 2011, Chargebee’s software makes implementing subscription billing and recurring payments easier for small and medium-sized businesses (SMB). It claims to have over 7,000 customers in 53 countries.

Subscription economy

Around the world, a subscription economy is catching on. Anything from software on the cloud to milk and eggs can be delivered on monthly subscriptions. That’s why even legacy software companies like Microsoft and Adobe are trying to transform themselves with new services offered on subscription.

As billing and accounting are crucial pieces of any business, many want to build their own in-house software. But financial service software is complex and requires specialization, given all the compliance requirements involved, including taxes, privacy issues, and data protection laws. For most companies, that would be a substantial investment away from their core business.

“For example, Amazon Web Services is so cost-effective that you don’t have to build infrastructure in-house anymore. We look at billing similarly,” Subramanian says. “Our core value proposition is that you want to grow your business, and so you don’t want to do anything but your core business in-house. That is where a plug-and-play billing system like ours will help you scale your business.”

Photo credit: Pexels

Big rival? No problem!

Three days ago, Silicon Valley-based Zuora – which, like Chargebee, provides billing and other financial services to companies with recurring revenues – filed for an IPO on the New York Stock Exchange. It reported an annual revenue of around US$168 million and a net loss of around US$47 million in its last fiscal year.

But, in a way, that’s good news for Subramanian and team. “Zuora going public is a great validation for the overall space and for us that the market exists. It is a 10-year-old product going after SAP, Oracle, and the likes,” he says, adding that subscription billing is still a largely untapped market. “We don’t have to be the first to market.”

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