Five9 takes on $34.5M to get more call centers aboard the cloud

Like other industries, call centers and their contact-center relatives have been looking more to cloud computing and relying less on on-premise gear. One of the beneficiaries of that trend is Five9, which makes software for call- and contact-center employees that runs on Five9 servers in colocation facilities.

Five9 was founded in 2001 “as a pure-play Software as a Service (SaaS) back in the ASP (application service provider) day,” said Mike Burkland, the president and CEO. Over the years, the San Ramon, Calif.-based company has moved from doing business mainly with small and medium-sized businesses to large companies, too. It claims more than 1,800 customers.

The company’s software lets customers have automated call-answering with voice recognition. It routes calls to available representatives and lets employees handle both inbound and outbound calls. It’s possible for managers to keep an eye on employee efficiency, and the system hooks in easily with customer-relationship management (CRM) software. Now, Burkland said, it’s just a matter of selling the concept to more companies.

That’s where Five9’s new round of funding comes in.¬†On Wednesday the company announced $34.5 million in funding, including $22 million of series D equity led by SAP Ventures and $12.5 million in bank revolver¬†debt from City National Bank. Previous investors Adams Street Partners, Hummer Winblad Venture Partners and Partech International also participated in the equity round. The company has now raised $71.6 million in total venture funding.

In its campaign to phase out proprietary software running on these facilities’ on-premise gear, Five9 naturally faces competition from vendors offering those solutions, particularly Avaya, Genesys and Cisco, (s csco) Burkland said. As for smaller cloud-based competitors, Burkland said, “They tend to come and go.”

Part of the appeal of horizontal SaaS products from Five9 and their ilk is that customers don’t need to worry about paying up front for hardware or on an ongoing basis for external support or internal management. The pay is more granular, as customers pay per seat per month. While there are fewer revenue streams to count on, the revenue comes in more frequently. “There’s very low risk profiles compared to their classic enterprise software brethren, which used to have to make every new quarter with customer sales,” Burkland said. The trick is to keep existing customers while adding new ones, and that’s what Five9 is aiming to do.