Moving your business to the cloud is the easy part these days. Keeping your business running smoothly on the cloud is where the challenge comes in. According to Mary Meeker’s Internet Trends report for 2017, the average enterprise uses 91 cloud-based marketing services and that’s just for marketing. Throw in other functions critical to a business like HR, Collaboration, Finance, and Sales and that figure jumps even higher. The thought of managing all these services for your company becomes a daunting one but it doesn’t need to be. BetterCloud does the heavy lifting through its industry-leading platform and enables IT departments to manage and create security policies for all the various SaaS services that are deployed within a company. The company is bringing sanity to scaling an enterprise in the cloud and is already trusted by thousands of customers including NYC startups BuzzFeed and Blue Apron.
AlleyWatch sits down with BetterCloud CEO and Founder David Politis to chat about the cloud, the shift in the SaaS market, the company’s future plans, and most recent round of funding, which brings the company’s total funding to $106.9M since its founding in 2011.
Who were your investors and how much did you raise?
Series E, $60M, led by Bain Capital Ventures with participation from existing investors including Accel, Greycroft Partners (through Greycroft Growth), Flybridge Capital Partners, Tribeca Venture Partners, and New Amsterdam Growth Capital.
Tell us about BetterCloud.
BetterCloud empowers IT teams and professionals to define, remediate, and enforce management and security policies for SaaS applications like G Suite, Office 365, Salesforce, Slack, Dropbox, etc.
What inspired you to start BetterCloud?
My father is an entrepreneur. Growing up, he’d take me on his business trips and it’s those experiences that inspired me to start my own company.
Based on my experience at my two previous companies, I simply saw a huge opportunity for building software to help companies manage and secure SaaS apps, and went for it.
We are the first in this new category of SaaS operations management — 451 Research said we are “pioneering a new IT market category” — so it’s hard to make comparisons and say why we’re different.
One fundamental difference from a product perspective is that all of our integrations are API-based. This makes the application very easy to deploy because there’s no hardware setup or network configuration involved, and also more scalable.
What market you are targeting and how big is it?
We’re targeting any organization using SaaS applications. Worldwide spend on SaaS applications will be nearly $100 billion in 2020 according to Gartner, and the market for applications like BetterCloud will be some percentage of that number.
What’s your business model?
We have a typical SaaS model of annual subscriptions, sold through both our direct sales team and channel partners.
What has changed since your last round in 2015?
In terms of BetterCloud, almost the entire business has changed. Our product has gone from being a tool for managing a single SaaS application, to a platform that can manage and secure many SaaS applications and be customized to fit the needs of any organization and IT team. Our team has adapted to market and sell that platform, which is much more complex. With the increased breadth and depth of the product’s capabilities, we now have more people within each customer organization using the product, including some new groups like HR who might partner with IT to automate employee onboarding and offboarding processes.
In terms of the market, SaaS adoption has continued to accelerate. In 2015, a lot of companies were still adopting SaaS through controlled, IT-led deployments of cloud office suites like G Suite and Office 365. Today, many leading IT teams are actually leveraging “shadow IT” (employees introducing apps into the organization without IT’s approval) as a way to innovate, and partnering with business units and departments to secure these applications while encouraging their use. In our own customer base we see hundreds of organizations with multiple Slack deployments that started in different parts of the org, different file collaboration apps for different teams, etc. and IT then needs to normalize all of those applications into one digital workspace for the org.
What was the funding process like?
We always knew we’d be raising another round of financing, especially when we saw the success of our new platform. As a result, I kept conversations going with investors over the last couple of years. We kept getting the same feedback, which was that we needed to show critical mass on our new platform. We started seeing that in Q3 of last year but by the end of Q4 it was becoming clear that we were onto something special and the sooner we could raise a round, the sooner we’d take the air out of the room and solidify our leadership position. Late Q4, I started the real fundraising process and basically lived in the Bay Area for 5 weeks straight until we had found the right investor.
What are the biggest challenges that you faced while raising capital?
We’re creating a new category so establishing an understanding of the problem we’re solving is always a challenge. But we point to other significant new technologies like mobile devices and cloud that have given rise to dedicated security solutions for IT, such as mobile device management.
What factors about your business led your investors to write the check?
Enrique Salem (managing director at Bain Capital Ventures, who led this round and joined our board) has extensive experience in security software as an operator, board member and investor. He immediately and innately understood the problems our platform solves and sees how the market opportunity for SaaS operations management is enormous.
What are the milestones you plan to achieve in the next six months?
We are announcing a key integration and significant new platform functionality over the next couple of months. We’re also hiring across the board in both our New York and Atlanta offices; we actually have dozens of roles open in 10 different departments right now with Sales leading the pack.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
There isn’t that many great companies with great products with great teams. So my advice is to go build that and everything else will come. There can be a lot of distractions, there are a lot of challenges but stay hyper focused and be brutally honest with yourself along the way.
Where do you see the company going now over the near term?
Our theme for this year is that we’re “just getting started” and I truly believe it. We’ve been the best kept secret for too long, and we plan to use this funding to go out to the market in a much bigger way than we have in the past.
Where is your favorite bar in the city for an after work drink?
The truth is that I don’t go for many after-work drinks but when I do, I go to karaoke with my team at Karaoke One 7.