Zuora Receives £36m For European Expansion

US-based subscription commerce and billing company Zuora, touted as the Salesforce.com for back office systems, has received $36 million in its latest funding round led by Index Ventures, to drive its expansion into Europe.

Led by Tien Tzuo, who worked for Salesforce.com for nine years before launching his own software-as-a-service (SaaS) venture, Zuora offers a commerce platform for companies adapting to what Tzuo calls “the subscription economy”. He believes that, by providing a customisable payments platform, Zuora could replace traditional ERP systems, such as those from SAP and Oracle.

“The subscription economy offers a different value proposition,” said Tzuo, speaking to Techworld. “Young people hate buying stuff, they want to be able to access services when they need to. We help our customers provide their customers with that flexibility.”

Unlike the app store model popularised by Apple, which creates a degree of separation between a company and its customers, the subscription-based model encourages companies to foster direct relationships with their users, explained Tzuo. Meanwhile, Zuora just acts like the company's cash register.

Companies can divide their customers into categories depending on their subscription usage and charge them accordingly. The technology automates everything from taking orders to storing the customers' payment details file. Security is built-in, meaning that resources spent on maintaining the billing system and ensuring compliance can be reduced.

Tzuo said that Europe is an important part of the company's growth strategy, and that this latest round of investment, which brings total Zuora funding to $82.5 million, will enable it to build an EU-based data centre and expand its marketing and product portfolio in the region. The new data centre will allow comapnies' sensitive data to be stored within the EU.

“Europe is really embracing SaaS, and in many ways it is ahead of the US in embracing the subscription economy,” said Tzuo. “EU telcos are much more aggressive that US telcos in pushing their subscription services, and media and publishing companies are ahead in terms of charging for content.”

Zuora's European customers already include News International, Reed Business Information, Touring Club Suisse and VNU Media, as well as startups like Ceros, MediaSift and SocialGo, which together represent €2 billion in contract subscription revenue to flow through Zuora’s systems.

The company opened an EMEA headquarters in London this year, and has appointed Paul Averill as VP and general manager to lead the business in this region.