Salesforce partner Apttus becomes latest B2B unicorn

Phil Wainewright Profile picture for user pwainewright September 1, 2015
Summary:
Another Salesforce platform ISV raises a big round in the run-up to Dreamforce as enterprise cash-to-quote vendor Apttus claims unicorn status

© Mike Brown - Fotolia.com
(© Mike Brown - Fotolia.com)
With just two weeks to go before the start of Salesforce's annual Dreamforce mega-conference, its partners are racing to close headline-grabbing funding rounds.

The latest is configure-price-quote (CPQ) vendor Apttus, which today revealed a new round of $108 million to bring its total funding to $186 million. The round was raised at a $1 billion-dollar valuation, according to a company spokesperson, enough to confer coveted 'unicorn' status — a term that was originally coined to convey rarity but which nowadays seems to be an accolade that no Silicon Valley startup wants to be without.

Today's news comes hot on the heels of last week's $82 million round for service management provider ServiceMax, rounding out a total of $202 million in its funding to date.

Like ServiceMax, Apttus has built and runs its software entirely on the Salesforce platform, making it one of a select but growing band of Salesforce-native ISVs. Other strongly-funded examples include FinancialForce.com, Kenandy, Vlocity and listed stock Veeva Systems.

The lower cost of development and infrastructure incurred when building on the Salesforce platform means that these vendors have less need to raise venture funding than conventional cloud ventures that build their own infrastructure. Veeva notably achieved IPO with just $7 million in funding. Apttus bootstrapped its growth for several years before raising its first round of finance in 2013.

Aggressive growth

Kirk Krappe, CEO Apttus
Kirk Krappe, Apttus

According to founder and CEO Kirk Krappe, the decision to take funding in that first round was to enable the company to invest more aggressively in growth. Until then, Apttus had posted profits every quarter, he told diginomica last year:

We said we don't need to raise capital. We never took it. We were adamant not to raise money. But then we said, if we got some astonishing valuation and could take a few percent, should we? And that’s what we did.

We made a decision we would just max it out. We grew the company hard ... Our burn rate changed.

Sales costs for Apttus are particularly intensive because the company targets large enterprise prospects, with deal sizes in sight of as much as $10 million per year.

The new round will also fund product development to help Apttus target specific industry verticals, reflecting a need to converge its sales efforts with Salesforce's own renewed focus on industry cloud solutions. According to the Apttus press release:

The funds will be used to provide new business solutions and services to Apttus customers and prospects in fields such as manufacturing, life sciences, financial services and telecommunications.

The new investment round was led by sovereign wealth fund KIA, joined by existing investors Iconiq Capital, K1 Capital, and Salesforce Ventures.

Disclosure: Salesforce and FinancialForce.com are diginomica premier partners. Vlocity is funding the author's travel to Dreamforce as part of a paid consulting engagement.

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