SugarCRM Inc., a maker of sales-tracking software, raised $40 million from Goldman Sachs Group Inc. to speed global expansion as it takes on larger rivals Oracle Corp. (ORCL:US) and Salesforce.com Inc. (CRM:US)
The Cupertino, California-based company will use the cash to invest in research and development as well as sales and marketing, Chief Executive Officer Larry Augustin said in an interview. Sugar 7, the latest version of SugarCRM’s customer-relationship management software, will debut in October.
“We think the opportunity for CRM is vastly underpenetrated,” Augustin said. “We figure there are 450 million to 500 million people in customer-facing roles. Today, commercial CRM companies serve maybe 20 million of them.”
Investors on the public and private markets are circling emerging business software providers as companies move away from traditional packaged and desktop software. Cloud-based providers like Workday Inc. (WDAY:US) and ServiceNow Inc. (NOW:US) have soared since their initial public offerings last year, while startups such as Box Inc., Zendesk Inc. and New Relic Inc. have raised growth-equity rounds from large institutional investors.
Before this investment, SugarCRM had raised $79 million. Augustin wouldn’t comment on the valuation, saying only that it’s “up and to the right” since the last investment round early last year.
SugarCRM, founded in 2004, added 600 new customers in the second quarter, bringing the total to 6500 commercial clients. Most individual users run a free version of the program, and paying customers are charged $35 to $100 per user per month. Sales rose 30 percent in the second quarter from the same period a year earlier, about half the growth rate for all of 2012.
Augustin, who said late last year that the company may go public as soon as 2013, declined to comment further on its plans. The company has 400 employees and is close to profitability, he said.
Antoine Munfa, a vice president at New York-based Goldman, will join SugarCRM’s board. The investment was made by Goldman’s Private Capital Investing group, which backs growth and mid-sized companies in North America.
“The CRM market is ripe for technologies and products that change the face of how enterprises conduct business with their customers,” Munfa said in today’s statement. “SugarCRM, with its user-centric vision and product design, has stepped up to meet a real market need.”
To contact the reporter on this story: Peter Burrows in San Francisco at email@example.com
To contact the editor responsible for this story: Pui-Wing Tam at firstname.lastname@example.org