Business intelligence firm Phocas Software has received an influx of cash to expand its presence in new industries, further develop its core analytics products and accelerate its growth in the U.S. and U.K.
“OneVenture’s 2018 investment in Phocas marked the first time the BI vendor received outside capital after previously being self-funded.”
Phocas, an analytics software vendor founded in 2001 and based in Sydney, secured $34 million ($45 million AU) in funding led by Ellerston Capital, which contributed $27 million ($35 million AU). OneVentures, a shareholder in Phocas that first invested $10 million in the vendor in 2018, contributed an additional $7 million ($10 million AU).
The vendor offers a cloud-based SaaS analytics platform aimed at midsized businesses with a particular focus on manufacturers, wholesalers and retailers. It currently has more than 1,900 customers, including Thermo Fisher Scientific.
"It's a massive boost to a company that has been bootstrapped for 20 years," said Scott Colvin, managing director of Sydney-based consulting firm Blackpeak Capital. "Phocas will be less restricted and be able to invest more heavily in product development and marketing. There is a very large market opportunity for Phocas, and this funding will help accelerate a number of strategic growth initiatives."
The industries in which Phocas plans to expand its presence -- it provides industry-specific preconfigured data sets and data cubes -- include financial statements, budgeting and forecasting, according to Jay Deubler, president of Phocas' U.S. division. In addition, the vendor recently partnered with a construction real estate reseller for ERP vendors Sage and Infor.
It's a massive boost to a company that has been bootstrapped for 20 years. Phocas will be less restricted and be able to invest more heavily in product development and marketing.
Scott CalvinManaging director, Blackpeak Capital
"Traditional BI gives you what's happening in your business, and Phocas has always enabled customers to understand why it happened," Deubler said. "We've been moving toward, and what we'll accelerate into, is going from what to why to what's next or what-if. It's pretty exciting."
Given that many of Phocas' users don't have backgrounds in data science, ease of use is one of the key tenets of its platform. Phocas' tools plug directly into customers' ERP systems -- along with numerous other data sources -- and the vendor has partnership agreements with more than 20 global ERP vendors, including U.S.-based Epicor.
Despite its ease of use, however, it's an advanced BI platform comparable in capabilities to those offered by the leading vendors, according to Colvin.
"Phocas data analytics is both advanced and industry-specific," he said. "A key point of differentiation often quoted by Phocas customers is the ease of use and ability to customize the Phocas tools compared to competitor products. Phocas also ranks as a category leader in key business intelligence software surveys, which is a remarkable achievement for a bootstrapped business based in Australia."
Meanwhile, expansion in the U.S. and U.K. is nothing new to Phocas, which has business evenly distributed among the U.S., U.K. and Australia-New Zealand. But the vendor wants to accelerate its growth in the U.S. and U.K., where there's more opportunity to expand its customer base than in its more sparsely populated home region.
Phocas generated $43 million in revenue in 2020 and, after growing by 25% to 30% annually in recent years, has a stated goal of reaching $100 million in revenue in the near future. In addition, according to the company, it boasts 90% recurring revenue and a 97% customer retention rate.
A sample Phocas Software dashboard shows a company's sales performance on a monthly basis.
As a private company, that data is not publicly available for verification.
With $34 million in additional capital, expansion into new geographical markets and developing its product to meet the needs of new industries figures to help generate the growth needed to reach $100 million in revenue.
"The key for us is that this is the right time to accelerate our growth," Deubler said. "We've been growing at a nice clip, but we want to increase the growth in the U.S. and U.K., and open new markets as well. It gives us a chance to really explode as a company."
While investors bet on Phocas' growth potential, it's the vendor's past that attracted the investments from Ellerston Capital and OneVentures.
"Investors were impressed with the growth already achieved by Phocas," Colvin said. "It's rare for bootstrapped companies to be consistently profitable and grow to over $40 million in revenue without external capital."
