Chargebee, a subscription management and recurring billing platform used by big-name companies such as Okta, was founded in 2011. The company’s core subscription management smarts help software-as-a-service (SaaS) companies identify new revenue channels through experimenting with pricing models; upselling through pitching additional features or bundles; and gleaning a unified view of all subscription and customer data.

Additionally, Chargebee also offers tools to automate recurring billing and invoicing; serve global payment options in more than 100 currencies; and forecast through data-infused financial reports and analytics.

Chargebee reports

Chargebee had previously raised around $218 million, including a $125 million tranche less than a year ago, and with another $250 million in the bank the company is now well financed to bolster its core platform with new features including fresh pricing and selling models; newer payment methods; and additional reporting options. This builds on a duo of recent acquisitions in the revenue recognition and churn management space that extended Chargebee’s reach further into the subscriptions management space.

“We will continue to listen to our customers to understand their needs to scale,” Chargebee cofounder and CEO Krish Subramanian told VentureBeat. “We will focus on getting Chargebee into the hands of more customers globally as we build our team to meet the surge in demand.”

Subscriptions surge

So, what, exactly, is creating this surge in demand? Well, data suggests that subscriptions (and SaaS, by extension) will only continue to grow, be it through video gaming, music-streaming, or enterprise software. Build a business around recurring revenue versus one-off purchases creates a healthier business model, as a company doesn’t have to generate as many new sales. However, while Gartner has previously predicted that 75% of all direct-to-consumer companies will offer subscription services by 2023, only one-fifth of those will “succeed in increasing customer retention.”

Reducing churn and retaining customers is at the heart of Chargebee’s offering — it’s about giving SaaS companies insights through data, and enabling them to try out new things at a time when much of the commercial world is having to experiment with new ways of driving business.

“There is already a shift happening among [business-to-consumer] B2C businesses that we expect to continue, where businesses have had to adjust their business and revenue models to meet changing demand from consumers, the majority of which are no longer coming through the door at physical locations,” Subramanian explained. “To stay afloat, we have seen a lot of experimentation happening with new product lines, pricing changes and overall attempts to make brands more sticky to increase customer acquisition and retention.”

While many businesses have been closely aligned with subscriptions since their inception, such as Netflix or Spotify, other more “traditional” businesses are getting in on the act too — Taco Bell, for example, recently launched a $10 monthly taco subscription. This builds on a recent trend where more unconventional subscription services have gone to market over the past decade, from underwear to grooming products and beyond.

“More traditional businesses like automotive and food and beverage are now entering the subscription space to increase customer loyalty and collect better data,” Subramanian said. “Taco Bell’s subscription service is an example of building virality with a new model. We have also seen a rise in subscriptions in the replenished goods, healthcare services, beauty and wellness and e-learning spaces to meet consumer demand for convenience and accessibility.”

Underpinning much of this drive has been the rise of cloud computing, which has essentially made SaaS the “dominant IT model for software,” according to Subramanian.

“The pandemic has been a huge driving factor in this evolution, as digital transformation efforts have accelerated use of subscription services,” he said. “For example, as the number of employees working remotely has fluctuated in recent months, businesses have had to scale collaboration tool licenses up and down based on business needs. There is no longer a one-size-fits-all approach, and demand could change very quickly. Flexibility is now a necessity.”

This is where Chargebee is particularly well placed to benefit from these various societal and industrial changes — it supports experimentation, gives valuable real-time data on the impact of their decisions, and ultimately helps them grow.

“The biggest problem we solve is helping businesses scale and effectively manage growth,” Subramanian said. “We make workflows efficient and reliable by connecting various data points that give the business operational insights across the subscriber lifecycle to drive customer retention and financial compliance.”

Chargebee, today, announced the company has raised $250 million in a round of funding. This now puts the company at a $3.5 billion valuation.

The raise comes as the software-as-a-service (SaaS) market is flourishing — public cloud end-user spending is projected to be a $400 billion market in 2022, according to Gartner, with SaaS constituting the lion’s share of that spend at $145 billion.

Chargebee’s latest funding round was led by Tiger Global and Sequoia, with participation from Insight Partners, Sapphire, and Steadview Capital.