Anglo-American startup FinancialForce pockets $110m to take on NetSuite

FinancialForce has tight links with salesforce and the funding to target cloud ERP

Yesterday’s receipt of $110m in funding for FinancialForce will go some way to heating up the cloud ERP sector, as the UK-originated, San Francisco-headquartered company gets the money to go head-to-head with NetSuite and others in a strategic spot that’s changing fast. I spoke by phone to the company’s British CEO Jeremy Roche about the company’s progress and that influx of cash.

FinancialForce has a slightly unusual history. The first lines of code were written by Coda, a UK ERP firm that was bought by UNIT4 in 2008 and backed by a group that includes Indeed, FinancialForce is inextricably linked with its San Francisco neighbour.

Roche said that while the first $50m tranche of funding raised last year was used “to prime the pump” by building products and business functions, this round will help “balance the business out” by bolstering product development, sales, marketing, alliances and customer support. And of course to capitalise on a “huge opportunity”.

FinancialForce calls itself an ERP company, although reluctantly.

“The term ERP is used and misused a lot and for quite some time we tried not to use the term as it has that whiff of history around it and when we got the opportunity to start anew we wanted to do it differently.”

However, analysts needed a pigeonhole so ‘ERP’ it is. To narrow that down though, FinancialForce sees its closest competitor as NetSuite, the Californian e-commerce and ERP company that appeals largely to small and medium-sized businesses but has seen increasing interest from larger enterprises.

“NetSuite had a 12-year run on us and we're catching them up,” says Roche. (NetSuite had almost $158m in revenues for its most recent quarter.)

However, while NetSuite has verbally sparred with, FinancialForce is very tight with the pioneer of, and leader in, cloud applications, Salesforce. FinancialForce is built on the Salesforce One platform and Salesforce Ventures invested this time around, along with TCV.

Like many in the cloud, Roche also likes to compare his company with Marc Benioff’s.

“We want to do for the back office what Salesforce did for the front office” is his high-concept message. As well as integrating financials tightly with Salesforce’s CRM, FinancialForce offers human resources, supply-chain management and professional services automation.

Roche says his company is almost doubling revenues year on year (91%) and now has an annualised $50m run-rate. With refreshing honesty he says that number is simply a multiple of 12 on the company’s most recent month.

“We’re the first ERP built on Salesforce,” he says. “It’s a tightly integrated suite of apps but you don’t need to buy it all in one go as that’s a bit old fashioned. ERP tends to be a journey now.”

That approach to ERP contrasts with the monolithic approaches of yore and Roche stresses that despite the cosiness of the relationship with Salesforce, many customers aren’t themselves Salesforce CRM users.

The target audience is broad: all the way from micro-businesses to companies with over 3,000 staff. In terms of replacement opportunities, “usually it’s somebody outgrowing somebody,” he says, referencing QuickBooks, Sage and Microsoft, but at the top end customers could be predominantly SAP and Oracle shops.

Roche, an ERP veteran, says FinancialForce remains a combination of Silicon Valley and “Silicon Dale”, referring to the Yorkshire hills near where the company has its roots. Most R&D is still done in Harrogate, Yorkshire, perhaps best known as the English town where crime author Agatha Christie once “disappeared”. Even in the US, he adds, Yorkshire tea is a preferred tipple among staff - although something stronger might have been called for this week.