This NYC Startup Just Raised a $25M Series D Round



The cloud is taking over offices all over, as more and more businesses of all sizes are making the move to the cloud environment. While it may make life easier – and a lot more affordable – on many levels, there are issues that need to be addressed and special tools required, as anyone in IT department will tell you.

Enter BetterCloud, the leading provider of critical insights, automated management, and intelligent data security for cloud office platforms, which just raised a $25 million Series D funding round. BetterCloud founder and CEO David Politis spent his whole career working in cloud environments, so he’s been there, done that, and knows just which tools those companies need, now and moving forward.

Who were your investors and how much did you raise?

The $25 million Series D round of funding was led by new investor Accel with participation from all existing investors including Flybridge Capital Partners, Greycroft Partners through its new Greycroft Growth Fund, Tribeca Venture Partners, New Amsterdam Growth Capital and Millennium Technology Value Partners. This brings BetterCloud’s total funding to $47 million.

Tell us about your product or service.

More than 50,000 organizations and 32 million users manage, secure and report on Google Apps and Microsoft Office 365 instances through BetterCloud. As more companies move their email and collaboration systems to the cloud (Gartner projects that 60% of companies will do so in the next 5-7 years), IT departments require new toolsets specifically built for these cloud office environments, that provide control and help ensure regulatory compliance. BetterCloud’s software solves these issues by delivering critical insights, automated management, and data security that not only make IT teams’ jobs easier, but also fuel greater utilization of cloud office platforms.

What inspired you to start the company?

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David Politis

I was an early employee at the largest cloud consulting company, helping organizations navigate the move to the cloud, which included everything from migrating their data to training their users. It was clear that this move to the cloud was happening and was about to take off, and that it would be led by the shift to the two major cloud office platforms – Google Apps and Office 365. But when companies were making the switch, their IT teams were asking for the management and security tools they historically would purchase from CA, BMC, Quest, HP that would help manage their environments. With this new cloud environment and the dynamics that come with it, they were asking for us to build custom applications to manage it. I saw the opportunity for a company that is dedicated to building that tool set that would make it easy for IT to do their jobs in a world where the applications that every worker uses every day – office productivity applications – run in the cloud. The cloud IT world is very different from the legacy on premises world.

How is it different?

I would say there are three things that make us different in this industry and in general

  1. Born in the cloud – my whole career has been spent at cloud companies. This is what I know, this is what I’m passionate about and our team is the same. We are not trying to take old systems and methods and retrofit them for cloud. We’ve built from scratch to solve the problems that these cloud IT professionals have.
  2. Distribution – over 50,000 organizations all over the world use our product. We have the deepest understanding of the best practices in this space, and the most data on how companies are using cloud office systems. This is part of our major competitive advantage, and it can add value to our customers in a way that nobody else can in this space.
  3. Culture – We work very hard to protect our culture.We have a very hard interview process, through which every person on a team interviews candidates for their team and needs to want that person on board. We’ve given true ownership of projects to everyone at the company, and have a culture of delivering a world-class customer experience to every one of our customers.

Which platform do you see getting more traction presently, Google for Work or Office 365?

They are both getting a lot of traction, but this space is only now reaching its first inflection point. They’re both enterprise-class platforms that provide (almost) the exact same features. Google Apps is based on Google’s consumer offerings and is becoming more ‘enterprise’ every day. Many people don’t realize they’ve been in this market for over six years at this point, and Google Apps is used by some of the largest organizations in the world. Office 365 is based on Microsoft’s legacy products and is becoming more ‘cloud-enabled’ and easy to manage.

The deeply integrated nature of the Google Apps platform is one of the platform’s greatest strengths. Everything is so well connected, you have chat right inside your mail client, searching in your email pulls up Drive files as well, you can easily attach Drive files to emails and Calendar invites, and much more. A big strength of Office 365, depending on the user population, is the continuity with legacy Office. If some users prefer or require desktop Excel, and mobile workers need only lightweight viewing and editing, you can easily keep everyone happy on Office 365.

What market you are targeting and how big is it?

We are looking for any organization that is moving to or already operating on one of these platforms – Google Apps and Office 365. It’s a huge market. Gartner projects that 695 million workers will use cloud office platforms by 2022. Our products currently manage 32 million users, so that tells you our enormous growth potential.

What’s your business model?

It’s a freemium model. We give our monitoring and alerting solution away for free and then have two premium packages that customers can upgrade to, based on what they’re looking for.

What was the funding process like?

Overall, it pushed me. Anytime I go out and talk to VCs, it’s a wake up call.They give you examples of successful companies they’ve worked with in the past, how they did certain things, etc. They ask hard questions about your business, they dig into the data and challenge you on certain things. That is fun, it’s inspiring, it reminds you that there is a lot more to do, and that’s actually a good feeling.

What are the biggest challenges that you faced while raising capital?

Staying focused on the business. Fundraising can be very distracting and time consuming. For good reason on both sides of the table, but it’s important to continue to focus on the business to ensure that it’s continuing to run. When you start the process, you have to know you are in for some long days for months, and that there isn’t any way around it.

What factors about your business led your investors to write the check?

I believe that it is everything that I said earlier about what makes us different. We’re in a huge market – maybe the biggest shift in IT for the last 20 years. We have a unique and central position in this market and our team/culture is amazing.

What are the milestones you plan to achieve in the next six months?

The next big milestone is getting our Office 365 product out of beta. We’re also working hard to build out our team.

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

My advice is to be focused on your business, not to get distracted by all the stuff that’s going on in the market, and not to get distracted by what other people are doing.If you have a good business, someone will fund it.

Where do you see the company going now over the near term?

We are continuing to focus on product development.We are working on some new functionality that we will announce later this year that will take us into the next chapter of the company’s history.

What’s your favorite New York activity, on a cloudy day?

Just hanging out with my wife, Jessica, and my 14-month-old son, Noah, in our apartment. I spend a lot of time at the office and traveling for work, so whenever I get a chance to just hang out with my family, I cherish the time.

About the author: AlleyWatch

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