Zuora Lands $115 Million Funding Round In Latest Sign That Cloud Subscription Model is Hot

Zuora, a cloud vendor that lets companies offer their products as subscriptions online, landed a $115 million Series F funding round earlier this week that included participation from its first two public market investors.

Zuora sells a cloud service that automatically handles all the commerce, billing and finance functions involved with selling products online via subscription. It's getting attention from enterprise software vendors because it helps them navigate challenges of selling their traditional products as cloud services.

One big advantage software vendors get from using Zuora is being able to offer customers flexible pricing and packaging options for cloud apps, Zuora CFO Tyler Sloat said in an interview. In a crowded cloud market, this is a way for vendors to differentiate themselves, he added.

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Zuora has now raised more than $250 million since its founding in 2008, and its new round includes participation from its first two public market investors, Wellington Management and Blackrock.

Sloat said their participation shows that Zuora's market opportunity extends into other areas besides software. Customers in a wide range of other segments, including media, communications, health care and education, and also using Zuora, he said.

New investors Premji and Passport Capital also took part in the round, along with existing investors Benchmark Capital, Greylock, Redpoint, Index, Shasta, Vulcan and Next World Capital. Salesforce.com Chairman and CEO Marc Benioff and Workday co-founder and board chairman Dave Duffield also took part.

Zuora CEO Tien Tzuo was employee number 11 at Salesforce.com, joining in 1999 and serving as chief marketing officer and chief strategy officer during a nine-year tenure there. His company sees itself as a kind of next generation version of CRM or ERP, which Sloat described as "relationship business management."

While Zuora sells its service directly to customers, Sloat said the company does some co-selling through partners and might consider a resale model at some point. The Foster City, Calif.-based vendor has partnerships with Citrix, Hewlett-Packard and Salesforce.com, as well as Cloud Sherpas, an Atlanta-based cloud consultancy.

Although Zuora has a valuation approaching $1 billion, Tzuo doesn't seem to be in a hurry to go public.

"This is like a mini IPO or maybe a private IPO. We have the benefits of the capital without the hassle," Tzuo told Fortune on Wednesday. "We can continue to put our heads down."