Intacct Raising $45M for Cloud Accounting Software
By Deborah Gage | San Jose | VentureWire
Accountants and chief financial officers have resisted putting important financial software into the cloud because of the sensitive data it contains. They’re afraid if there’s a breach, their jobs will be at risk.
Intacct Inc. has been working to change their minds and has now raised another $45 million in equity and debt to keep doing that as it heads toward a potential IPO.
The equity part of the round, which is $30 million, was led by Battery Ventures and includes new investor Morgan Creek Capital Management and all current investors. The $15 million debt package comes from Silicon Valley Bank.
Valuation is not disclosed, but it falls between what “average” companies that deliver software as a service are getting–about 7 times revenue–and what richer companies like Workday Inc. are getting, which can be as much as 30 times revenue, according to Chief Executive Robert Reid.
Intacct does not disclose revenue, but said it achieved record growth for the quarter ending December 31, with bookings up year over year by nearly 40%.
“We’ve got to execute against delivering great customer success,” he said.
Intacct is targeting mid-market companies, which it defines as having between 20 and 2,000 employees. These are companies that need a more robust accounting package than what Intuit Inc. offers small businesses but also a more flexible accounting package than what’s offered by Microsoft Corp. or Sage Software Inc. when they don’t run in the cloud, Mr. Reid said.
The advantage of cloud-based accounting is that companies can see their numbers in real time, which lets them react more quickly and become more efficient, he said. Intacct has also worked to make its software more intuitive and easy to use, which business users, being used to the commercial Web, have come to expect.
The company’s biggest challenge now is marketing, which is one reason that Battery was chosen to lead the round, Mr. Reid said. The firm last year hired an executive in residence, Jonathan Sill, a former chief marketing officer at Shoedazzle.com Inc., who helps companies that sell to businesses learn to use consumer marketing techniques.
“We saw a big opportunity to ramp up investment in sales and marketing and make sure that everybody out there knows about them,” said Battery General Partner Chelsea Stoner, who joins Intacct’s board.
Intacct was recapitalized in 2007 after tweaking its business model and has now raised $135 million in equity and $15 million in debt. Other investors who participated in the equity round include Bessemer Venture Partners, Costanoa Venture Capital, Emergence Capital, Sigma Partners and Split Rock Partners.