This morning FloQast, an LA-area startup, announced that it closed a $40 million Series C led by Norwest Venture Partners.
The company also told A Technology News Room in an interview that it raised a $20 million inside round between todays investment and its 2017 Series B.
Including todays infusion, the firm has raised a little over $90 million.The small inside round, however, wasnt executed because the firm was low on options at the time.
Instead, FloQast chose it over larger term sheets, using the cash to help launch a new product.
It then raised the round were discussing today at a higher valuation.
What did FloQast launch, and what impact did that choice have on its business? Lets talk about what FloQast sells to help us answer both questions.ProductFloQast sells what it calls close management software, which might not mean much if you arent read-up on accounting.
So, A Technology News Room got FloQast CEO Mike Whitmire on the phone to explain it in more detail.
According to the technology executive, his company helps teams collaborate around the month-end close we help them communicate [and] stay on the same page with this process that occurs at the end of every month.
And then we provide some light automation around [the] tie-out and reconciliation process, which is one of the steps of actually closing the books.Why does all that matter? Because a company cant report its financial results until its books (accounts) are closed (finalized).
So, Whitmire explained, you cant get to a 10-Q or other bedrock financial report without this sort of work.
And given that every company in the world has books that need closing, you can see where FloQast fits into the business landscape.FloQast doesnt target every business, however.
According to Whitmire, when a company reaches five people in the corporate accounting department is where the pain starts to present itself that FloQast wants to help with.
And, in his view, the more complex a business becomes, the larger the need for the sort of help that his companys software can provide.You can see where were going with this by now.
If not, heres some help: If FloQasts product works for larger companies, how quickly is its revenue (measured in annual recurring revenue, or ARR) growing, and, more precisely, how quickly is its average annual contract value (ACV) expanding?ResultsEarlier we noted that FloQast decided to raise a small round before its Series C, using that money to launch a new product before raising its later, larger investment.
That product, something called AutoRec, uses what the company calls AI to help reconcile accounts more quickly than would otherwise be possible.The wager, launching that product before its Series C, paid off.
Last year FloQasts annual contract value (ACV) rose 60%.
That gain was driven, according to the CEO, by the new AutoRec product [helping add] more value to contracts, and his company focusing more on upper-market customers.
Its ACV growth helped FloQasts growth stay consistent in percentage terms, with the CEO telling A Technology News Room that his firm grows like clockwork, doubling its ARR on average every year.
And the companys SaaS metrics look good: Including customer churn, Floqast has a net retention of 115%, which is solid.Summarizing his companys last year or so, Whitmire said that FloQast cut [its] cash burn, became very efficient, grew at a similar clip to what weve grown historically, maintained our net revenue retention number, and had this massive ACV kick.
Its not hard to see, then, how FloQast put together its latest round.So, the L.A.
area really is more than Snap and Bird.
You can build big SaaS companies there, too.