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If you buy the notion that practically every software application — or, indeed, practically any kind of product — can be sold not for a one-time price, but as a subscription, then you probably don’t need much of an explanation of the “subscription economy.”
If you don’t get it, then allow us to introduce you to Zuora, a cloud software firm that helps companies handle the process of attracting subscribers and managing accounts, billing, payments, revenue recognition and tracking. Founded in 2007 by Tien Tzuo, the first chief marketing officer at Salesforce.com, the company today announced a $115 million Series E round of funding led by private investment firm Wellington Capital.
In the late ’90s, it was a pretty radical idea to charge a subscription fee for something like, say, software to run a business, but it was right about then that companies like Salesforce and NetSuite arrived on the scene doing exactly that. Cloud file-sharing company Box was an early Zuora customer, as was Hubspot, a marketing software firm. Now the idea of subscriptions is spreading fast to health care and manufacturing companies, Tzuo said in an interview. Recent new customers include Honeywell, General Motors and NCR.
The same logic that probably applied to your smartphone plan — where your carrier charges a small monthly fee against its cost for the phone — applies just as well to a $250,000 gene-sequencing machine, he says. “The company that makes it can more easily sell thousands instead of a few hundred,” he said. “And they get recurring revenue instead of one big sale all at once.”
The round brings its total capital raised to $250 million. Other investors include the investment firm Blackrock, as well as Premji and Passport Capital. Prior investors include several VC firms like Benchmark Capital, Greylock, Redpoint, Index, Shasta, Vulcan and Next World Capital, as well as two personal investors, Workday founder Dave Duffield and Salesforce CEO and founder Marc Benioff.
This article originally appeared on Recode.net.
