Catalyst portfolio company Weave, a customer experience management (CXM) platform, raised an additional $37.5 million in a Series C funding round. Catalyst participated in the round led by Lead Edge Capital along with other existing investors Bessemer Venture Partners, Crosslink Capital and Pelion Venture Partners.
Catalyst led a $20 million Series B round of funding for ChowNow, a SaaS ordering platform providing restaurants with online ordering tools and branded mobile apps. Existing investors including Steadfast Venture Capital also participated in the round. Catalyst partner Tyler Newton has joined ChowNow’s Board of Directors.
Weave provides voice, SMS, email and marketing services to dental and optometry offices. Its unified communications as a service (UCaaS) product combines VoIP phone service with a customer service application that integrates with customer data from existing practice management software to help manage patient reminders, initiate phone calls, engage in two-way texting, solicit customer reviews and other customer relationship management functions. The company serves more than 3,600 dentists and optometrists across the country.
Clinicient Inc., a leader in outpatient rehabilitation business solutions, announced its Insight Care Navigator, the first therapy-specific care coordination system to seamlessly connect care coordinators to therapists, orthopedic surgeons, other providers, and bundle administrators with the tools and data to ensure patients get the best care, at the lowest cost in the most appropriate setting.
“Fusion has built a reputation with its Fortune 500 customers as not only an exceptional risk management platform, but also as one of the tech industry’s top customer service practices,” said Ryan McNally, partner at Catalyst Investors. “The company is a clear leader in its space and is growing rapidly and profitably while gaining market share. The management team consists of world-class industry veterans with impressive track records of delivering enterprise-grade products to the largest corporate customers. We look forward to helping the company continue to gain market share, develop new products and expand internationally.”
Catalyst has been investing in SaaS since before the term was coined (we funded MessageLabs, an enterprise email security SaaS offering, in 2000). Since then, we have invested in several other growth stage SaaS businesses, including MINDBODY (NASDAQ:MB, business management software for health and wellness studios), Ascentis (human resources management software), Jobvite (social recruiting software), and Conductor (content intelligence software for marketers), among others. Over the years, we have shared our views on how the SaaS space is evolving, including a research piece (SaaS Investors: Mind the Valuation GAP (Growth at Any Price)) that introduced our proprietary equation for valuing SaaS companies.
Software-as-a-service (SaaS) companies have had a great run over the course of the current business cycle. The sector has routinely traded at a multiple above five times revenue, even while having low or negative profit margins. From 2010 to 2013, market observers posited that valuation multiples in the sector were driven by growth alone – the faster the better – no matter how much cash burn it takes to achieve. Since the public market for software stocks hit a speed bump starting back in Q1 of 2014, however, there has been a general perception that profitability is becoming more of a factor in driving SaaS valuations. This awareness is driving capital allocation discussions at companies across the SaaS sector, both public and private. Should a company raise money to “keep its foot on the gas?” Or should it perhaps slow growth a bit but make the move to “EBITDA-positive?”