Helping SaaS Companies Grow Through Revenue Sharing: Avangate CEO Carl Theobald (Part 4)

Sramana: What kind of customers are you working with?

Carl Theobald: Starting back in the early days, it was all about very small startups. They were software companies that wanted to sell downloadable software such as anti-virus. These were companies that sold games or PC performance tools. The other set of companies that used Avangate back then was SaaS companies. We have remained true to those segments.

Recently we started going into cloud services. We look at companies that sell online subscriptions, such as tech support services. We have companies like MyFICO.com and other cloud-based subscription services. We are moving into cloud service companies that sell their subscriptions online.

From a size perspective, we started with small startups. We have 2,800 customers total. The majority of those are small customers, and we love them. We still have our self-service edition, which allows these companies to start doing business without ever having to talk to a sales rep. That is very attractive.

A lot of these startups get bigger. We found that as we have evolved, we also meet the needs of these companies as they grow into mid-market companies. Mid-market is now a very strong target for us. We will target companies that make $5 million of revenue up to a couple of hundred of million dollars of revenue. That is a sweet spot for us. We have added some direct salespeople who go after those accounts.

We have also gotten some very large customers opportunistically. If you look at our website, you will see that we have companies such as HP in our client portfolio. We have been successful in those accounts, and it is great validation that our platform scales. Our focus right now remains on the mid-market, but we will be opportunistic.

Sramana: How many new accounts do you sign up each month?

Carl Theobald: On average we sign up 70 accounts per month. Most of those customers are small startups that use our self-service features. They are not accounting for a large portion of our revenue because they are small, but from an account perspective, they are the majority.

Sramana: What is the revenue share that you take?

Carl Theobald: There is some variance based on the size of the business. On average it is an 8% range. That does vary depending on the bells and whistles that you turn on and off.

Sramana: Who are your affiliate partners, and what are they getting paid?

Carl Theobald: The affiliates sign up into our network and include folks like Download.com and CNet.com. We have 40,000 affiliates in our network. They sign up into our cloud, and our software vendors sign up in our cloud. We facilitate a negotiation between them. They negotiate with each other. The vendor decides what cut they would like to offer an affiliate for driving traction to the vendor.

We do all the tracking. We know if someone went to Download.com and ultimately purchased from one of our vendors. When we take down that transaction, we will respect the split agreed upon between the vendor and the affiliate. We will charge a slight fee on top of that 8% for the vendor that got the deal through our affiliate network. The affiliate effectively gets paid by the vendor, not by us.

This segment is part 4 in the series : Helping SaaS Companies Grow Through Revenue Sharing: Avangate CEO Carl Theobald
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