How 1 Ex-Cognizant and 3 Former Zoho Employees Went On To Create a Unicorn
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“India is a big focus for us and we’re investing our R&D to solve for the Indian market,” said Rajaraman Santhanam, chief operating officer and co-founder of one of India’s latest entrants to the Unicorn club, Chargebee.
India has certainly drawn the interest of foreign investors and made top executives of enterprises turn their heads. However, several Internet companies are skeptical about launching operations in India, despite the fact India is on the verge of witnessing the next 500 million Internet users. Why? It is because subscription-based services are not quite popular here in India.
In order to address the issue, and help businesses expand by automating operations around subscriptions, billing, among others, Chargebee was founded back in 2011.
From Drawing Room to California
Chargebee was founded by Krish Subramanian, Rajaraman Santhanam, Saravanan KP, and Thiyagarajan T. Back then, Subramanian was working with Cognizant, and the other future co-founders were working to build SaaS portfolio products and cloud applications at Zoho. Interestingly, one common link between them was that Subhramanian and Santhanam had studied together. Both of them had earlier dreamt of running their own company.
When the time was right, Subramanian and Santhanam decided to quit their jobs and started working towards their own goal of starting a company that will provide a sustainable solution for a larger problem. Both of them roped in Saravanan KP and Thiyagarajan T. along with them. In the initial days, long hours of discussions, late-night research and chalking the plan used to take place at one of the co-founder’s drawing rooms. The makeshift office was separated from the living area with a curtain. It is from that space they started their operations without knowing that their headquarters will one day be in the US.
The startup in terms of revenue is growing 100 per cent year-on-year and aims to continue this growth. Chargebee also boasts a net retention rate of 150 per cent, indicating its customers are doubling in revenue every 18 months.
Why Foray Into Subscription Services?
Chargebee is a subscription billing and revenue management platform that allows businesses across verticals to manage and grow their revenue by automating operations around subscriptions, billing, invoicing, payments and revenue recognition. The startup also provides key metrics, reports and insights into their business, thus helping to grow further. Headquartered in California, US, the startup also provides services such as Smart Dunning that automates the revenue recovery process.
Rajaraman Santhanam, chief operating officer and co-founder of Chargebee
SaaS and subscription-based business is now a popular business model. However, a decade ago it was not accepted.
“Back in 2011, SaaS and subscription-based business models were still a novelty but we realized the massive potential in this market. Having researched the industry and market, a problem that continued to resonate the most with us was that of enabling businesses to build on the recurring relationship economy that was still nascent but picking up speed,” Santhanam added.
He said that for a subscription service to operate at scale, delivering a consistent experience across all customer touch points is essential.
Further explaining, he said startup building a SaaS product and planning to sell it across 200 countries while relying on an internal billing system to track pending payment, offer coupons, tab on thousands of subscribers, charge them accurately, while supporting different billing cycles, payment method is a ‘nightmare’.
He claims that Chargebee abstracts all of these billing complexities and offers a secure, all-in-one subscription billing and revenue management platform that lets one focus on building the best product out there.
Initially, Chargebee started with billing, but later on went beyond the bounds of billing into revenue operations.
“Today, Chargebee is used by businesses for its fast time to value and the quick adaptability to match the revenue strategy to internal and external changes that occur in the scaleup journey,” he boasted.
First Cheque To Unicorn
While Chargebee might be enjoying the limelight today, it took them a decade to enter the prestigious Unicorn club. The startup raised its first angel round in 2012 and it received its first big cheque worth $8,00,000 from Accel Partners in 2014.
“Accel has been a very close partner with us since the early days. Even today, Shekhar Kirani who's on our board from Accel continues to help us whiteboard and brainstorm our thoughts,” he added.
The startup in 2015 got the attention of Tiger Global, which led their Series B round worth $5 million. Fast forward to 2021, Chargebee raised $125 million in Series G round. The investment round was led by new investor Sapphire Ventures and existing investors Tiger Global, Insight Venture Partners and Steadview Capital. With the latest round of capital infusion, Chargebee’s valuation tripled in six months and is now pegged at $1.4 billion.
Chargebee now caters to thousands of subscription businesses in SaaS, ecommerce, OTT, and other spaces across North America, Europe, Australia, New Zealand, and the Asia Pacific. It serves over 18000 customers which include over 3000 paying customers and more than 15,000 freemium customers.
Utilization of Fresh Funds
As per Santhanam the fresh capital will be used to increase investment in R&D, to continue building the innovative subscription management platform and scale its sales and marketing team.
“Our focus is to maintain our easy to use user interface (UI) and quick deployment methodology to help our customers rapidly adapt to the ever-changing business landscape and support their growth needs. We’ll increase investment in all Customer Service and Support functions to ensure we are providing best in class customer service as we continue to scale,” he explained
Chargebee has further pledged a total of $5 billion in processing for early-stage startups, where it has committed to offer $100K of free processing for 50,000 startups over the next few years.
During the ongoing pandemic, Chargebee noted that its customers across the spectrum were able to get more out of Chargebee - either by pivoting and finding new opportunities, or scale faster and capture the exploding opportunity.
“We are proud to have enabled these shifts in decisions and support our customers through these turbulent times, only opening more doors of opportunity,” he added. MakeSpace, a customer physical storage solution and a customer of Chargebee pivoted to business storage solutions.
When asked about going public, Santhanam said a lot is left to be done before Chargebee goes for an IPO.