ChurnZero raised $25 million in capital as it seeks to continue driving growth of customer success at subscription-based businesses.
The D.C.-based company’s Series B round was led by JMI Equity, the Baltimore growth equity firm that this week closed its 10th fund to invest in software companies at $1.7 billion. The round included participation from existing investors Baird Capital and Grotech Ventures, the latter of which has an office in Cockeysville. ChurnZero has now raised $35 million.
Founded in 2015, ChurnZero works in the area of customer success, which has grown as businesses with subscription models — including software-as-a-service, or SaaS companies, as they’re known — have stood up teams to ensure that clients are receiving value from a product, and ultimately decide to remain with the company. These teams are focused on retention of customers, and looking to prevent customer “churn,” a closely watched metric in SaaS circles that tracks customers who decide to end a subscription.
It’s a still-nascent business department where ChurnZero CEO You Mon Tsang, an entrepreneur who moved to D.C. after founding and exiting multiple companies over 20 years in the Bay Area, recognized a need for a software platform that could provide analytics, workflow and automation tools. Typically, customer success is in the category of teams a tech company adds when it reaches growth stage. ChurnZero has built a growth company by providing such a platform for these teams, as Tsang told Technical.ly.
The company’s software pulls together customer account data from various platforms. It also has tools designed to help a customer success team understand how customers are using a product, the likelihood that they will renew a subscription and expand. It works primarily with cloud native companies that are using a variety of tools, where ChurnZero can help give a unified vision of the metrics a customer success team tracks.
In 2020, the company only saw more focus on customer success, as companies sought to retain clients against the pressures of an economic downturn.
“COVID has accelerated this belief that the most important asset a company has is its customer base,” Tsang said.
With the growth funding, ChurnZero is planning to expand across the business in areas like sales, marketing, product and its own customer success team. Tsang expects to grow an 80+ person team that started the year at just under 70 employees to 125 by the end of 2021 — check out its current open roles on its website — and will continue product development.
ChurnZero is also investing in the success of the space in which it operates, so part of the funding will help in efforts to build energy around customer success as a whole.
“The other thing we know we have to do in a new and growing space is actually invest in the community,” Tsang said. The company was already gathering folks around this effort, and once vaccines are more widespread, he said, “you’ll see us invest in a lot of events, a lot of education, a lot of best practices and trying to build up customer success as a discipline.”
Tsang said there are two areas where they are especially focused on this whole-market effort: For one, not every company that could benefit from a customer success team has one. And if you have that team, the awareness and adoption of technology to help these teams is still growing, as well.
“As growth software investors, we have seen firsthand the rise of customer success as a function, and the power of software to help customer success teams better engage and retain their end customers,” said JMI Equity General Partner Larry Contrella, who joined ChurnZero’s board with the investment. Contrella, who is based in the firm’s Baltimore office, was promoted to the general partner role in December.-30-
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