There’s no doubt that subscription economy companies are powerful engines in today’s global economy. Some analysts estimate there are 40,000 emerging and growth B2B SaaS, cloud and subscription-based businesses – most of them small and mid-sized operations with a burning need to more efficiently manage their business processes, manage GAAP revenues and keep tabs of the unique financial metrics needed to run their companies.
SaaSOptics was founded to eliminate this pain – and fast-growth subscription-economy startups have flocked to their cure. The Atlanta-based software maker now manages over $2.5 billion in revenue for more than 400 customers and recently closed a $5 million Series A round to further fuel its rapid growth.
CEO Tim McCormick spoke with SandHill.com about SaaSOptic’s alternative to “spreadsheet hell,” the “long-tail” opportunity missed by the big ERP players, and the benefits of Atlanta’s startup ecosystem.
SandHill.com: Is it true the founder created SaaSOptics to make his own job easier as a subscription economy entrepreneur?
Tim McCormick: Yes, David Ryan is an accomplished “software entrepreneur.” He had already founded several companies and had two successful exits when he founded SaaSOptics in 2009 during the economic downturn.
As we see with our client companies today, Ryan knew that entrepreneurs don’t have a lot of extra employees to deal with function-specific processes. Finance-wise, everyone turns to Quickbooks. But if you are running a recurring revenue business, you can’t do what you need to do with Quickbooks alone. You have to also manually deal with a bunch of spreadsheets in order to manage contract terms, revenue recognition, invoice scheduling, renewals – and more. These spreadsheets have to calculate the non-GAAP figures you need to manage and grow a subscription economy business, like monthly recurring revenue, customer lifetime value, annual contract value, and others.
Ryan vowed his next company would fix this problem for SaaS entrepreneurs like himself – and SaaS Optics was born.
SandHill.com: What benefits have SaaSOptics customers realized?
Tim: SaaSOptics succeeds with its simplicity. The big players missed the mark: It is impossible to repackage an ERP system in a simple way for small, fast-growth businesses. The reason is the enterprise-grade ERP systems are too costly, take too long to deploy, and are too disruptive for a small-but-growing business to implement.
SaaSOptics levels the playing field for small players by automating their business with a system only large B2B SaaS businesses have the resources and time to afford. We make our system affordable by pricing it based on our customer’s trailing-12-months revenue. This enables us to serve startups as small as $2 million in revenue as well as we can serve those with $100 million.
SaaSOptics only focuses on B2B SaaS and cloud-based companies. We link Quickbooks, Salesforce.com, NetSuite, Sage Intaact, and other popular systems to automate and streamline the workflow of order taking, fulfillment and renewal opportunities. SaaSOptics lies atop every single revenue transaction in a client’s business. We can run MRR, ARR, CLV, and moving averages, and monitor how those metrics fluctuate with each transaction that hits the system. We deliver a “single source of truth” across business operations that allows top execs to actively manage change and navigate their growth.
Importantly, we “eat our own caviar” – as tech vendors have been known to say. As CEO, SaaSOptics lets me see our orders come into our CRM system, watch them book into SaaSOptics, and understand how each order changes our business in real-time. I have granular visibility into new revenue, customers, general ledger information – in fact, I can tell you we just acquired our 406th customer.
SandHill.com: How did SaaSOptics recognize its market potential?
Tim: Well, if our growth is any indication, we are only scratching the surface of a massive and growing market. In 2015, we had 177 customers and as I mentioned, we now serve 406 customers worldwide.
Today’s subscription-economy vendors are focused mainly on the 150-200 SaaS large cloud businesses with more than $100M in revenue, but the “long tail” of the market includes thousands and thousands of businesses who desperately need this financial functionality to more easily run their companies.
Our round of funding will enable us to scale up our marketing machine. We want to be sure leaders of growth businesses know there is a solution in the market that will eliminate their need to stay with manual processes, managing disparate tools and living in “spreadsheet hell.”
SandHill.com: What are the benefits of headquartering a software company in Atlanta?
Tim: I’ve been in the Atlanta technology community since 1990 and I see it really starting to accelerate. Obviously, we have great universities – Georgia Tech, Emory and the University of Georgia – that turn out a talented set of engineers, marketing and salespeople in the region. We also have a field of incubators and accelerator programs that have advanced in terms of the quality and quantities of companies they are turning out. Atlanta consistently shows up in the top U.S. tech markets and I can personally vouch for the success SaaSOptics has experienced here.
Clare Christopher is editor of SandHill.com.