September 6, 2013
According to research from Gartner by 2015, between 35% of global 2000 companies will generate 5-10% of their revenue through subscription-based models. A number of businesses today offer services that require customers to sign up online, and as the customer base grows for these enterprises managing their bills becomes a tougher task. It is expected that the cloud billing market will grow from $2.4 billion in 2013 to $9.58 billion in 2018, at a CAGR of 31.9% during the forecast period.
Chargebee, a Chennai based startup, which is operated by Bubblepath Inc. is a simple subscription billing solution for online businesses, especially SaaS (Software-as-a-service) and retail. Chargebee was launched in 2011 by a four member team which includes KP Saravanan, Krishnamoorthy Subramanian, Rajaraman Santhanam and Thiyagarajan T, who have worked at Zoho in the past. The company provides small and emerging businesses to automate the entire billing process to run subscription services with added features like flexibility to change pricing, offer discounts and run promotions.
Chargebee had raised $350,000 from angel investors in the US in 2012 according to a report from Techcircle. It works with over 30 payment gateways like Braintree, Stripe, and authorize.net. Chargebee also supports 2checkout.com which is a PayPal alternative for Indian businesses that sell globally. Chargebee’s customers are mostly located outside India. The company is working around the regulations set up by RBI to acquire customers in India and grow their user base in India. As of May, 2013 Chargebee has signed up many customers in India. Considering that they started off in 2011, acquisition of so many customers in India in a span of 2 years seems good. One of the section in their website reads Chargebee is in the process of getting PCI - DSS accreditation. This may have added to their slow customer adoption woes.
ChargeBee automates most of the back-end operational grunt work by optimizing or automating the workflow for invoice generation, payments collection and follow-ups includingdiscount management for sales and marketing teams. All this is delivered as a SaaS plug & play solution delivered on the cloud. Their pricing model is based on the number of invoices generated. Chargebee offers 3 price points: Silver plan at US$49 per month for 200 invoices; Gold at $149 per month for 750 invoices; and Platinum $249 per month for 2,000 invoices.
When asked about the transactions, the CEO and Co-Founder Krishnamoorthy Subramanian had some statistics to provide – We are doing over 5,000 transactions a month with over 100 customers who have integrated with us. We're growing at 25 percent month-on-month in terms of the number of transactions. There are close to 50 customers that have live transactions delivered via our system right now, he says.
LTP View: With the election of the new RBI Governor (Raghuram Rajan) as of September 4th, 2013 and his statement supporting the bill payments systems. Indian Start-ups like Chargebee may see a high likelihood of acquiring customers in India.