Zuora $115M Investment Round Validates Subscription Approach

Zuora, the company that helps customers manage their subscription models, today announced a massive $115M funding round involving not just Silicon Valley venture capitalists, but also public market investors.

Those public market names include Wellington Management Company LLP and Blackrock Inc, as well as Premji and Passport Capital. Existing investors Benchmark Capital, Greylock Partners, Redpoint Ventures, Index Ventures, Shasta Ventures, Vulcan and Next World Capital also invested along with Dave Duffield, co-founder and chairman of the board atWorkday; and Marc Benioff, chairman and CEO at Salesforce.com.

Todays investment follows a $50M round in September 2013 and brings the total investment across all rounds to $250M, according to Zuora.

The size of this round and the involvement of those public market companies could signal that Zuora is ready to move to the IPO stage. While CEO and co-founder Tien Tzuo was not ready to commit to such a move, he did acknowledge that the pieces were in place should the company wish to go in that direction at some point. He said for now though, the company is content to take advantage of its non-public status.

We now have a size round normally only available in the public markets and the type of investors in public markets, but we arent public. We dont have to report on our earnings. We can continue to keep our heads down and work.

He added, We will IPO when the time is right of our choosing.

Tzuo admitted while he was excited to announce this type of round, the money was a double-edged sword in some ways because in his words, The bar has been raised. The expectations are high.

He didnt sound like a man who was afraid of that challenge, but he understood the implications of this type of investment.

Tzuo was an early employee at Salesforce, helped build its billing system and left in 2007 with the blessing and investment of CEO and founder Marc Benioff to start a company that would push the subscription model that Salesforce helped popularize.

In 2007, that thing we talked about as a different business model and Benioff [recognized]every company was going through a similar transformation. Stop selling products and start serving subscribers, he said.

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Zuora $115M Investment Round Validates Subscription Approach