Aria Systems closes $20M Series C round

The company's subscription billing solution has attracted some big names and heavy hitters

Subscription billing solution Aria Systems announced Tuesday the close of a $20 million Series C round led by InterWest Partners, with help from previous investors Hummer-Winblad and Venrock.  An unnamed “large, global technology firm” also contributed an undisclosed amount to the round, bringing Aria’s total funds raised to $34 million.

Founded in 2003, the San Mateo-based company has seen some impressive growth over the last few years.  In the fourth quarter of 2010, Aria reported a tripling in the number of bookings compared to Q4 2009, as well as a doubling of the size of the average first-year transaction.  CEO Mike Morini expects Aria’s revenue to quadruple in 2011 as businesses realize the value of a subscription-based business model and look to jump on board subscription billing platforms.

Indeed, even in the heart of the economic recession in 2009, Aria’s clients were seeing their recurring revenue streams grow by 70% or more.  “It’s a recession-proof business model,” said Aria’s VP of marketing Lance Walter in an interview with VatorNews. 

“Aria’s focus was in the mid-market in 2009,” Morini told me.  “Our customers in 2010 and 2011 are driving into the upper middle market and the global 2000.  We’re getting bigger companies looking to launch new strategies with non-traditional solutions. They want to get to market very quickly with their product offering.”  Thus, it makes sense that such clients would prefer to hop onto a turnkey cloud-based billing system rather than dredge up the funds to pay for the manpower needed to create their own.

It’s interesting to wonder what services like Netflix would have become if they hadn’t adopted a subscription-based model.  It doesn’t seem that far-fetched to say that if Netflix had adopted a shopping cart-based payment system—where customers had to think about each payment they made before they checked out (and who wants to do that?)—it likely wouldn’t have seen anywhere near the kind of growth it experienced under the subscription model.

So who are some of the big names in the upper-middle market that Aria is working with?  The company’s 75+ customers include Disney, Roku, Taleo, DreamWorks, Ingersoll-Rand, and others—and this is where it really differentiates itself from its competitors in the subscription billing space.  Back in November, we covered Zuora’s $20 million Series C round, and while Zuora’s service closely matches Aria’s, Zuora is better positioned within the middle market while Aria is designed for the upper-middle market and the global 2000 companies that are looking for a turnkey billing solution. 

The two companies’ approaches also differ in that Zuora is more heavily focused on the back office and the transaction part of the model while Aria is looking to focus more on the front office.

“We look at the billing world as the lifecycle of the subscriber,” said Morini.  “You have to attract the customer and provision them, and then you want to be able to bill and report on it.  We’re really driving this much more to the front office.”

Morini joined Aria Systems in April 2010 after spending six years at OutlookSoft, a planning and performance management software provider, where he was responsible for growing the company’s user base from 10 customers to more than 800. 

In addition to the funding, the company also announced that InterWest partner Bruce Cleveland will be joining the company’s board of directors.

“Bruce is great.  I’m very market-focused and look at the market from a customer perspective while Bruce is more of a product guy,” said Morini, adding that the fresh infusion of capital from the Series C round will drive Aria to “the promised land” and keep it comfortable for a while.  The company will use the funds to double its headcount, pump more money into engineering, and drive its global expansion in Europe and Asia (the company currently serves more than a dozen international customers from Europe, Australia, and Asia). 

For now, Aria will focus on gaining more visibility in the North American market and will roll out its international expansion in the second half of 2011.  

Image source: AriaSystems.com