Zuora Raises $6.5M, Joins SaaS Billing Bonanza

A couple of startups are trying to become the PayPals of the business world, offering their enterprise clients a way to measure and invoice without resorting to expensive custom-built billings software that they have to host themselves. The latest of these, Zuora of Redwood City, Calif., has secured $6.5 million in Series A money from Benchmark and counts Coremetrics as one of its first customers. Tien Tzuo, CEO of Zuora, says the money will go toward building out the product and hiring a sales team.

In the age of the cloud, you can outsource everything. To me, outsourcing a billing system for a software-as-a-service provider seems like a hardware vendor outsourcing its inventory management, but I suppose just-in-time manufacturing has worked out for the hardware guys. So I’m trying to push aside my doubts about these new companies offering outsourced billing for anyone providing subscription services.

In addition to Zuora there is Austin, Texas-based eVapt, which doesn’t provide help in setting pricing the way Zuora does, but also recently closed a small $250,000 seed round. Ranjit Nayak, founder and vice president of marketing at eVapt, says The Economist Group is using eVapt’s service to track and invoice subscriptions and articles purchased on its sites. Another player in the space, Ireland’s LeCayla, was purchased in February by SaaS applications host OpsSource.

Right now, these guys are targeting SaaS vendors because they clearly understand the model, but both Tzuo and Nayak point to other subscription service providers — from online gaming to NetJets — as examples of companies that could use their services to get rid of another layer of complexity in their business.