On Wednesday, SugarCRM, a maker of sales tracking software, announced they had raised $40 million in private equity funding from Goldman Sachs’ Private Capital Investing (PCI) group.
Obviously, Goldman Sachs sees some advantage to owning a piece of SugarCRM. To assist developers and users understand the advantages of working with their company, SugarCRM has an extensive number of case studies
on their website. Sugar 7, the latest version of SugarCRM's customer relations management software, will be available in October.
The new funding brings SugarCRM’s total capital raised to $119.5 million since its founding in 2004. Their funding is divided between $100.5M in equity and $19M in debt. Previous funding sources included Draper Fisher serviced in, New Enterprise Associates and Walden International.
The Cupertino-based company will use the cash to invest in research and development as well as sales and marketing. According to CEO Larry Augustine they have had 15 consecutive quarters of growth. During the second quarter of 2013 they added 600 new customers bringing the total to 6500. Their reoccurring revenue, a key ingredient for software-as-a-service companies, grew about 30 percent in the second quarter.
Augustine continued with, "SugarCRM’s market momentum is being fueled by the global demand for more affordable, next-generation CRM systems to the individual user. Because we remain laser focused on bringing innovative solutions to the individual contributors first, while delivering high value for our customers, we are driving increased interest in CRM into the enterprise marketplace."
SugarCRM executive team - Co-founder and CTO Clint Oram and CEO Larry Augustine. Photo credit: VentureBeat
Three years ago at SugarCon 2010 in San Francisco
, the company’s yearly conference, BSN asked CEO Augustine about the possibility of an IPO. At that time he said it was premature to discuss that kind of a business decision. Times have changed - Wednesday, Augustine told VentureBeat
: "We are at a stage where we could be a public company [and] it is one of our goals."
The answer follows the typical progression of a successful start-up which typically targets five years of operation until the IPO or an alternative path of exit for the early investors.
SugarCRM faces stiff competition from the likes of Salesforce.com
, whose primary application is a cloud-based CRM application. Software giant ORACLE
, and SAP
also figure in the marketplace. However, Augustine said: “We’re focused on CRM and that’s all we do. Salesforce and the others do a lot of other things."We think the opportunity for CRM is vastly underpenetrated,"
said Augustine. He continued, "We figure there are 450,000,000 to 500,000,000 people in customer facing roles. Today, commercial CRM companies serve maybe 20 million of them."
SugarCRM also announced the appointment of Antoine Munfa, a vice president at Goldman Sachs, to its Board of Directors. Piper Jaffray and Company served as SugarCRM’s financial advisor during the funding transaction.
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