Cambridge, Mass.-based Fuze closed on round of venture capital totaling more than $100 million for the second year in a row, setting the stage for an initial public offering as early as next year.
Fuze is a provider of cloud-based Unified Communications-as-a-Service (UCaaS). Its products are designed to help enterprises become more productive and collaborative through seamless integration of voice, video and messaging.
Huge Investment Rounds
The $104 million investment round, led by Boston's Wellington Management Co., comes about a year after Fuze raised $112 million from private investors. Greenspring Associates and existing investors Summit Partners, Bessemer Venture Partners and G20 also participated in the round.
Fuze, which has about 700 employees and about 1,500 corporate customers, has raised more than $300 million since its founding in 2006. Fuze was known as Thinking Phones until a rebrand and UX design makeover last year.
Fuze co-founder and CEO Steve Kokinos told CMSWire, said the money will allow Fuze to continue to capitalize on "the momentum we're seeing in this market today." The money also fully funds the company's IPO plans, though Kokinos does not appear in a rush to go public.
Instead, he focused on the demand for unified communications, noting that some 400 million enterprise users use one or more communications tools every day at their jobs. Those employees need unified communications to do their jobs better from anywhere on any device — and they need the flexibility and scalability of a true cloud-deployed platform, he added.
UCaaS Market Momentum
"At companies with more than 1,000 employees, which is where we focus, less than 5 percent have migrated to the cloud," Kokinos said. "So in terms of 2017 and beyond, we're really focusing on continuing to deliver on a great product, and our engineering and global expansion and in general building on the momentum we’re seeing in the market."
Fuze grew sales last year by 90 percent, adding 449 new customers. Ten of those deals went for $71 million, according to company statistics.
MarketsandMarkets, a Pune, India-based research company, expects demand for UCaaS will make it a $28.69 billion industry by 2021, up from $17.35 billion today. It cited growing trends toward mobility and the bring your own device (BYOD) trend, continuous service support, low cost of ownership and pay-per-use model.
Kokinos said Fuze overlaps in some respects with other providers of enterprise collaboration platforms, including Slack, HipChat, Microsoft and Facebook.
"But we're taking a different approach," he told CMSWire. "One of the things we believed from early on is you need to be able give customers a way to move into the cloud and displace the legacy systems that exist today."
Slack and HipChat, he added, deploy a "land and expand model" that allows for easy deployment but it does not go to 100 percent of the company.
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"We look at how do we go in and replace all of the enterprise communication systems," he said, "and we're one of the few tools that get deployed to 100 percent of the users from Day 1. It puts us ina really powerful position to really be able to impact the way people get work done every day."
Companies simply use too many communication tools, which effectively creates a "poor user experience from the start," Kokinos said.
"It also means users have too many choices in terms of how they communicate with their customers," he said. "By delivering a modern experience, we're allowing people to communicate however they want to whoever they want, inside and outside the company. It removes a lot of the friction."
Executive Experience
Before co-founding Fuze, Kokinos founded BladeLogic, a data center automation company, and WebYes, a web hosting and application service provider. Fuze co-founder Derek Yoo, now the company's chief technology officer, was a product manager for BladeLogic, which went public and was acquired by BMC Software for $880 million.
Fuze CMO Brian Kardon was CMO at Lattice Engines and Eloqua as well as chief strategy and marketing officer at Forrester Research.
Fuze was one of the more than 100 technology companies that filed an amicus brief Sunday in the US Court of Appeals in San Francisco in opposition to Donald Trump's executive order curtailing immigration from seven predominately Muslim countries.
"Technology companies should be able to leverage talent regardless of where those people are from," Kokinos told CMSWire. "It's something we believe really strong in."
A three member panel from the San Francisco-based 9th U.S. Circuit Court of Appeals yesterday declined to block a ruling that suspended the Trump administration's ban.
