Open source has become a major force in the IT world, and today a startup that has built a profitable operation by developing business management software in the beginning is announcing a sizeable secondary investment thanks to that growth.
Odoo – a Belgium-based provider of open source business software ranging from ERP and inventory management to human resources and CRM software, marketing tools and more, some 30,000 in total – has received $ 215 million from Summit Partners.
This is a secondary investment, which means that Summit is buying shares of existing investors (specifically Sofinnova Partners & XAnge) – Odoo is profitable and has been for years, CEO and founder Fabien Pinckaers explained in a previous interview, so I didn’t need to raise more cash by giving away more capital. He added that this investment values the start-up at more than 2,000 million euros (or more than 2,300 million dollars at the current rate), which makes Odoo the first “unicorn” of Wallonia, the region of Belgium where it has its campus.
(That in itself is remarkable: it’s a sign of the evolving decentralization of the tech world beyond “The Valley.”)
This is the second time that Summit, which was one of Odoo’s first (equity) backers, has acquired secondary shares – the firm made a similar $ 90 million investment in 2019.
With 7 million users on its platform, Odoo is an excellent example of the strong benefits to be gained from economies of scale in the most successful open source projects, but it is also doing it with a twist.
On the open source front, Odoo offers a version of its services that is “open source” and free, which Pinckaers said contains about 80% of all its features. It then offers a paid, proprietary version of the product with the remaining 20% features (full details in prices here).
About 90% of Odoo’s entire customer base take the free tier, he said, and only 10% take the paid owner tier. But with 7 million users, that’s enough to run the business at a big enough profit that you can continue to invest in growth without giving away more capital.
Besides this, what is also remarkable is how Odoo is launched. While much of open source has been seen as the domain of developers and others in the technical community, what has set Odoo apart from them is the fact that it designs software on its platform that is actually targeted at others in the world. workplace, not engineers. .
“We are one of the only open source exceptions created for non-technical users,” said Pinckaers.
It targets users both directly through its SaaS platform and through a very extensive channel partner operation where the channel partners will host the services themselves. His traction with these partners is strong, he added, due to the free nature of Odoo (which not only contrasts with the SAPs, Microsofts and Oracles of the world, but is sometimes a much easier sale around which a partner of channel can provide other payment services). There are nearly 4,000 partners now, he added, with another 90,000 individual community members contributing software to the Odoo platform.
The company has been growing revenue and customers at a rate of 50% for the last 10 years (and 63% for the last 15 – it’s been around since 2005), and now has 1,700 employees with plans to add another 1,000 this year. . Turnover is expected to be 160 million euros in 2021. Pinckaers said Odoo’s next steps will be to continue developing the software it provides to users on its platform. Specifically, the two areas he’s focusing on are e-commerce and website development, he said, two areas that he thinks could benefit from more non-technical and easy-to-use open source tools.
“We are delighted to support the Odoo team for this next phase of growth,” said Han Sikkens, MD and Head of Europe at Summit Partners, in a statement. “We believe the future is bright and Odoo clearly has the potential to disrupt the market led by software giants such as SAP, MS Dynamics and Oracle.” Sikkens joins the board with this round.