Here’s how Icertis achieved a $500 million valuation in 4 years
Samir Bodas and Monish Darda started off building multiple cloud-based applications but scaled up when they homed on a contract management solution that has them competing with biggies like SAP and Oracle.
Derived from French for “beautiful view”, Bellevue is the second largest city centre in Washington state with 1,300 businesses and 45,000 employees. Home to many large and small businesses, this is where Samir Bodas and Monish Darda built a global organisation over the past few years.
The journey of Icertis - from a company that built multiple cloud-based applications to a leading enterprise contract management platform in the cloud - has been serendipitous. It took a chance meeting to put the founders on this track.
During a morning walk in April 2014, Samir and his friend Pradeep Singh, the founder of Aditi Technologies, were talking about Icertis, then in its fourth year. The company was generating a couple of million dollars in revenue and was bootstrapped with an investment of a million dollars. Samir told his friend that Icertis was doing well, and offered four cloud-based products.
Pradeep was particularly interested in the potential of one of them – a cloud-based contract management solution, a domain that had for years been dominated by SAP and Microsoft. Pradeep suggested the founders focus solely on contract management, and looked at raising money as it was a highly valued business and product.
“At that moment we and the team began to focus only on that, and worked to scale up fast,” recalls Samir, who was CEO of Aztec Soft (acquired by MindTree) before starting up Icertis in 2009. His co-founder, Monish, had earlier set up WebSym and worked in BMC Software. Both founders, in their early fifties now, recall that the single-minded focus helped them scale.
No looking back
Icertis raised its first round of funding, of $6 million, by the spring of 2015. There has been no looking back. In the first round, the company had a pre-money valuation of $22 million; it has a valuation of $500 million today and has raised $96 million. Its revenues are upwards of $50 million (it does not disclose revenues), and investors include Ignition, Meritech partners, PSP Capital, Cross Creek, B Capital, e.ventures, Eight Roads Ventures, and Graycroft.
So what was this product that helped Icertis scale up in quick time?
The Icertis Contract Management (ICM) platform helps companies transform their commercial foundation, ensuring compliance, improving governance, mitigating risk, and enhancing user productivity. This ultimately improves the bottom line. The platform is used to managing 5 million contracts by 3 million subscribers at companies like 3M, Daimler, Johnson & Johnson, Microsoft, Roche Wipro, ABB, Infosys, and Airtel in 40+ languages across 90 countries.
The AI-powered platform allows its 120 customers to increase contract velocity and agility, proactively manage entitlements and obligations, and offer commercial insights and intelligence.
Samir explains why contract management on the cloud has worked for them. “Contract management on the cloud reduces friction and increases the value of a contract by bringing all stakeholders on one seamless platform,” he says. He adds that machine learning helps organisations connect with thousands of vendors in an instant and manage contracts entered in to for the life cycle of their business engagement.
Consider the situation at a company such as Walmart or Amazon. It has legal and binding contracts with small and large businesses, and the business teams must know everything from product type to pricing and returns management. It can be a nightmare to onboard thousands of sellers on to a platform that requires multiple permissions and logins for vendors. The business would logically need to hire multiple people to manage this chain, but a cloud-based solution with machine learning components can help onboard all vendors with a few clicks. Everyone – from the business manager to even the leadership room - can track how contracts have been managed, saving time and money.
Why is contract management important?
A report by Research and Markets, Global Contract Life-cycle Management Market 2017-2021, says one of the major factors hindering the growth of this market is high implementation and maintenance cost. The high cost of deploying on-premise contract lifecycle management is one of the major challenges for SMEs. The price of the contract lifecycle management includes the cost of software licensing, system design and customisation, implementation, training, and maintenance.
Icertis, which is solving this problem, is now a top IT vendor and competes with SAP, Apptus, and CLM Matrix. Since it is hosted on Microsoft Azure, Microsoft is helping this young company with a go-to-market strategy.
“We have been able to use the Microsoft network to meet multiple clients,” says Samir, who is based in the US.
But how is Icertis making money? The business model of the company is an annual subscription model based on the total number of contracts drawn up and tracked. The India market provides 10 percent of the company's revenues.
Icertis has a 500-member R&D team in Pune. It also employs another 200 members in the US.
Naganand Doraswamy, Founder of IdeaSpring Capital, says: “This is a great example of how a company scales up, using an opportunity that has not been disrupted.”
Mukul Agarwal, CEO and Founder of BootUp, a startup accelerator, agrees. “Entrepreneurs succeed because of clarity and founders who have clarity on product and team. They scale up fast.”
What’s in the future for Icertis? The company hopes to scale to a billion dollars in valuation. For that, it’s working on becoming the de facto contract management product the world over. The meeting with Icertis was organised by TiE Mumbai as part of its delegation to meet successful businesses in the US.