Fortune Article

Good morning, Data Sheet readers! Several big funding events to discuss today, including a whopping $115 million late-stage round for subscription management company Zuora. Plus, Box competitor Egnyte is boasting about a high-profile customer win at its rival’s expense. Scads of other news, so read on and send feedback todatasheet@heatherclancy.com.

TOP OF MIND

Zuora raises another $115 million to target ‘subscription economy.’ One financial metric discussed liberally by cloud software companies is the recurring revenue driven by subscriptions.

Slowly, but surely that model is permeating other industries, especially when it comes to selling services. One obvious example is GE’s predictive maintenance business, now driving at least $1 billion annually.

The catch: accounting for subscriptions and managing renewals is far different from logging a product sale. That’s where Zuora comes in, and it is finding plenty of investors ready to buy into its worldview.

That includes a new $115 million late-stage investment announced this morning by several investors that usually wait until a startup enters the public market before jumping in: Wellington Capital, Blackrock and Passport Capital.

“This is like a mini IPO or maybe a private IPO. We have the benefits of the capital without the hassle,” said Zuora co-founder and CEO Tien Tzuo. “We can continue to put our heads down.”

Zuora’s relationship management software is used by the likes of Box, Dell, DocuSign, HubSpot, Marketo, Zendesk, and Schneider Electric to manage subscriptions, invoicing and (ultimately) renewals. Collectively, organizations working with Zuora handle more than $42 billion in invoices on the platform.

“The word ‘customer’ implies that someone may or may not buy something. The word ‘subscriber’ implies an ongoing relationship,” Tzuo said.

The new round brings the total capital raised by the eight-year-old company to $250 million, but Tzuo declined to discuss the valuation. All of the company’s existing investors participated in the new round, including Benchmark Capital, Greylock, Redpoint Ventures, Shasta, Vulcan, Next World Capital, Workday founder Dave Duffield and Salesforce chairman and CEO Marc Benioff.

One growth area for Zuora centers on services enabled by the Internet of things, which is what attracted companies like Honeywell and Qualcomm. To consider a specific example: ThermoFisher Scientific’s Life Technologies division (which specializes in medical diagnostics) uses Zuora to manage analytics services for gene sequencing.

“The shift to recurring revenues and subscriptions is everywhere,” Tzuo said.

IDC research vice president Amy Konary echoed that sentiment: “Across many industries, the business of enabling experiences and nurturing relationships is augmenting or replacing product catalogs, shopping carts, and ownership. Success in this new world requires monetizing relationships instead of simply selling units.”

Facebook offers feedback to marketers. Its new service, called Topic Data, will provide anonymized and aggregated information about the social chatter around events, brands, and even specific products. The social network will team with a company called DataSift to package the data into a form that can be analyzed for insights and sold to marketers interested in the feedback.

Incidentally, Facebook also wants to redesign your data center. It saved $2 billion over the past three years by overhauling how servers, storage and networking equipment are organized. This week, it published additional portions of that blueprint to the Open Compute Project, so other companies can benefit from its strategy.

Hillary Clinton: Using personal email was “convenient.” The former Secretary of State acknowledges it would have been smarter to separate personal and work email, but she wanted to consolidate digital correspondence in one place. Her decision to delete thousands of messages related to non-work matters is drawing sharp criticism.

EMC CEO Tucci repeats familiar mantra: No plan to sell VMware. During an investor meeting on Tuesday, the storage giant’s management projected double-digit growth for earnings-per-share in 2018. After the meeting, investment management firm Stifel maintained its “Buy” rating for the stock. “EMC did a thorough job of outlining its broad portfolio of solutions positioned for the meaningful transformations taking place in the enterprise data center,” Stifel analysts wrote in their report from the meeting.

THE DOWNLOAD

Business intelligence startup Looker raises $30 million. Meritech Capital Partners managing director Rob Ward, an early investor in big data companies Cloudera and Tableau Software, wasn’t actively seeking another business intelligence investment.

But after Looker’s software kept popping up within many of his firm’s other portfolio companies, Ward decided the two-year-old startup from Santa Cruz, California, was worth a look. “It’s hard to ignore that sort of natural virality,” he said, comparing adoption to the early word-of-mouth that drove Salesforce.com.

That’s one big reason that Meritech is the lead investor in Looker’s $30 million Series B funding round announced this morning, which also includes Sapphire Ventures, Redpoint Ventures, First Round Capital, and PivotNorth.

Looker’s software is used by more than 250 companies, including Yahoo, Dollar Shave Club, eyeglass retailer Warby Parker, collaboration software company Asana, grocery delivery startup Instacart, and social media site Upworthy.

“Looker provides our analysts with an intuitive, powerful environment to ask deeper, richer, and more nuanced questions that help us make the best, confident decisions,” said Warby Parker’s director of data science, Carl Anderson.

Support for “self-service” queries is part of what differentiates Looker from other business intelligence software companies, said Looker founder and CTO Lloyd Tabb. Analysts can search for information using natural language, which gives more individuals across an organization a potential view (or “look” in Looker’s nomenclature) into data that could affect decisions. "The people who are data-savvy become the most important people in the organization," he said.

“To me, what Looker enables is complete data transparency,” Ward said. “Better insights mean better execution.”

The new financing will go toward investments in sales processes and international expansion, said Looker CEO Frank Bien, whose resume includes executive roles at EMC, Greenplum (Pivotal), Virsto (VMware), and Vignette. The company already has customers in Europe, Asia, and Latin America. Its revenue increased 400% last year, and its “trial to customer win” rate is approximately 70%.

“We’ve hit the growth phase of our journey,” Bien said. The company hopes to exit 2015 with more than 500 customers on its books. It previously raised $16 million in August 2013.

ALSO WORTH SHARING

$30 million more for cloud application security startup.Elastica develops software that helps businesses control employee access to services including Amazon Web Services, Box, Dropbox, Google Drive, Microsoft Office365, and Salesforce. Its Series B funding round is led by Third Point Ventures, along with Mayfield Fund and Pelion Ventures. The company's technology is used by more than 275 large companies (it doesn't reveal names on its website).

Credit-derivatives pioneer tries her hand at bitcoin. Former J.P. Morgan executive Blythe Masters is now at the helm of Digital Asset Holdings. Its mission: help banks and other financial institutions figure out ways to trade digital currencies.

Bain Capital offers $2.4 billion for Blue Coat. The security software company went private in February 2012 through a $1.3 billion buyout by private equity firm Thoma Brava, and has made several acquisitions since then. While we're on the topic of consolidation in the security sector, PayPal just bought an Israeli startup, CyActive, that can predict the rise of malware and take preemptive measures.

Judge weakens HP intellectual property claim. The high-tech giant sued ServiceNow over eight network management patents, but a California court has ruled that half of them are too abstract to protect.

Google’s CFO intends to retire, but not before helping pick a successor.

Rival Egnyte poaches long-time Box customer Red Bull. This is one renewal that the newly public cloud file-sharing company obviously failed to close. The deal covers 10,000 seats and is valued around $500,000. Plus, Egnyte CEO Vineet Jain said there are more at least three more Box “takeouts” in his company’s sales pipeline. The two main motivators: access control concerns and the need to support hybrid data storage environments.

By the way, Box is due to report its first quarter as a public company later today after the market close.

First CFO for social analytics startup Hearsay Social. It hired William Salisbury, whose resume also includes 15 years with Morgan Stanley. Hearsay’s software is specifically targeted at financial advisors and insurance agents, and customers include New York Life, Raymond James, Vanguard, and Penn Mutual. So far, the company has raised $51 million from Sequoia Capital, NEA, and private investors.

How effective is your security technology? An Austin testing company, NSS Labs, can now help benchmark defenses in real time—much to the chagrin of security software companies.