Recurly Raises Another $12M to Grow Subscription Billing Platform
San Francisco-based Recurly, which untangles problems that arise with subscription revenue streams for companies including DishDigital, Groupon, and Zillow, said today it has raised $12 million in a Series B round from new and existing investors.
Recurly launched its service in 2010 to troubleshoot for the growing number of businesses that receive recurring payments by selling video subscriptions, cloud-based software as a service, online publications, and other products. Those companies rely on frequent credit card payments from subscribers, who often authorize regular charges to their accounts. But the revenues are frequently disrupted when credit cards expire, are stolen and replaced under a new account number, or when the charge is declined for a variety of reasons, from temporary holds to insufficient funds.
Dan Burkhart, Recurly’s CEO and co-founder, says his company gets the payments back on track when possible, helping clients retain customers and maintain revenues. Recurly uses an automated process to find the source of the problem and take appropriate action, such as resubmitting the credit card charge if it was declined in error, or sending an e-mail encouraging the subscriber to update his or her charge account information. Recurly also manages complex billing adjustments, such as upgrades to a higher level of TV service in the middle of a billing period.
Recurly recovers an average of 5.8 percent of gross revenues for its customers, Burkhart says. Recurly charges its clients 1.25 percent of the gross revenue it processes, and 10 cents per transaction. There’s also a monthly charge of $99 for basic service and $299 for the Enterprise plan.
Burkhart says the company will use its new capital to grow its staff from 60 to 125 people by the end of 2015. Recurly will also expand its platform by collaborating with partners who can offer additional services such as accounting and data analytics. The company currently serves 1,700 customers, and has now raised a total of $19.6 million.
Devonshire Investors, a private investment firm affiliated with Fidelity Investments, led the Series B round. Devonshire was joined by Greycroft Partners and Recurly’s existing investors, Polaris Partners and e.ventures.
Dave Barrett, managing partner at Polaris and a Recurly board member, says his firm backed Recurly’s seed round because Polaris’ other portfolio companies needed the kind of service Recurly offers.
“Because we invest heavily in SaaS (software as a service) companies, we recognized a huge market opportunity as there are incredible challenges associated with recurring revenue management within this space, which is growing rapidly,” Barrett says.