SaaS Management vendor Zylo has raised $31.5 million in a Series C funding round led by Baird Capital’s venture team. The round was also supported by Spring Lake Equity Partners and existing investors Bessemer Venture Partners, Menlo Ventures, and High Alpha, as well as a strategic partner and investor, Coupa. The sum raised is not much larger than the $22 million raised during the Series B funding round in 2019. It comes off the back of a successful year where the company doubled its revenue.
Eric Christopher, CEO and co-founder of Zylo, commented, “We’re proud to welcome Baird Capital’s Venture Team and Spring Lake Equity Partners as new investors who, along with our returning partners, recognize the potential Zylo has to cement our position as the SaaS Management category leader. This funding will allow us to accelerate product innovation and hiring, building on the success we’ve experienced this past year – a growth period that included doubling new business and setting records for demand and customer retention.”
Enterprise Times asked Zylo why they looked to work with the Baird and what else they offered. They answered, “Zylo wants to partner with investors that can help us with the growth resources we will need in the later stages of our company, customer acquisition and international expansion – and that believe in Zylo, its strong leadership, and the long-term potential and opportunity of the SaaS Management category we created.”
They also claimed that these investors gave them more geographic reach as they operate in different US cities. With Baird in Chicago and Spring Lake in Boston to add to the strong west coast presence.
Zylo intends to use the funds to further develop its spend management product and expand its go-to-market and engineering teams in the Indianapolis area where it is based. It is also looking to recruit wider afield with hybrid workers. It is currently advertising for six positions, all remote US based.
While the need is international and Zylo has multinational clients, the indication is that it has no immediate plans to expand its footprint abroad.
On Product
The Zylo platform enables organisations to have complete visibility of their SaaS expenditure. The platform helps reduce SaaS application spending, sprawl, and risk. With the current economic climate, organisations must better manage spend on SaaS solutions to improve cash flow. According to Zylo research, organisations use more than 300 SaaS applications and overspend 15% on licenses alone. Zylo helps CIOs and CFO to have greater visibility of what is being used and take action where over-licensing or duplications exist.
ET asked Zylo what product enhancements are on the roadmap. However, the spokesperson first indicated what had happened in 2022.
“Zylo continued to increase the pace of innovation in 2022 and so far has delivered over 100 product enhancements, including:
- An integrated, intuitive, self-service SaaS Benchmarks solution powered by the analysis of over $1.1 trillion in spend and generated by the Zybrary – Zylo’s proprietary library of SaaS applications that houses data for over 20,000 apps and counting.
- New Insights that bring software portfolio analysis and usage optimization opportunities to the forefront, connected directly to in-platform workflow automation.
- New Finance tools for effective spend management, including comprehensive fiscal year reporting and App Budget tracking with year-over-year budget analysis.
- Security Detail and reporting that enable you to surface apps that may – or may not – fit your business tolerances from a compliance standpoint.
“And coming soon, all new automation and lifecycle management solutions for IT, Finance, Line of Business and End Users.”
Why did these investors fund Zylo?
Benedict Rocchio, partner at Baird Capital and new Zylo board member, commented, “Investment in SaaS became even more critical in the past few years as companies sought to prioritize new tools and technology that helped keep their businesses running in the pandemic. However, this new environment contributed to accelerated SaaS spending and deployments that have lost efficiency and control, thus becoming its own challenge that is impacting companies globally. Baird Capital clearly recognizes the value that Zylo provides to their customers through SaaS management and believes it is of even increased importance in the current economic climate.”
For existing investors, there is a clear opportunity and one that Zylo’s growth indicates it is winning on. Byron Deeter, a partner at Bessemer Venture Partners, added, “With more than 30 million SaaS licenses and $30 billion in spend data under management, Zylo is the clear category leader. The need for companies to manage the rapid rise of SaaS and cloud subscription costs is evident. Zylo is growing alongside the demand, and Bessemer is excited to continue to invest and partner to further support their growth.”
Coupa
One thing that is different about the Zylo funding is the investment by Coupa. Coupa is a business spend management company, and a Zylo customer that is no doubt keeping a close eye on its success. It could become an acquisition target.
Eric Tan, CIO at Coupa, commented, “With a global workforce and thousands of employees, SaaS management wasn’t just a ‘nice to have’ but a critical component of our continued growth. Zylo gave us the transparency and visibility we were looking for to make strategic and business-aligned decisions.”
Zylo customer Coupa has experienced first hand the value that Zylo can offer to companies managing hundreds of SaaS applications.
ET also asked how Zylo differentiated itself. The spokesperson commented, “Zylo is the SaaS Management category creator, with 30 million SaaS licenses and $30 billion in spend data under management for companies like Adobe, Atlassian, Doordash, Intuit, Slack, Salesforce, Yahoo and more. We are the only solution purpose-built from the start for IT, Procurement, and Finance teams – the groups that gain the most value from a comprehensive, single source of truth for SaaS.
“We provide unmatched SaaS spend management and analytics by combining AI-powered financial discovery, deep application usage insights, and human expertise. Only Zylo can discover and classify 100% of SaaS applications across the enterprise.
“In addition, Zylo offers world-class services. We have unparalleled IT, Finance, and Procurement expertise in building a true SaaS Management program. Zylo’s expert services team takes on customers’ administrative needs, facilitates contract negotiations from end to end, and leverages industry best practices to meet business goals.”
Enterprise Times: What does this mean
Zylo targets the mid-market and enterprise sector. It helps organisations manage the sprawl of SaaS that was exacerbated during COVID. This injection of funds should help the company expand. It will be interesting to see what it achieves and whether it gets closer to Coupa as it grows. There is an overlap between the two organisations. However, when is the right time to acquire Zylo? Is it once they have cemented their presence in the US or after they launch internationally? Certainly, Coupa could help with the latter. These are interesting times for Zylo as it looks to improve functionality, geographic footprint and revenues.
