Paddle, a platform that helps software-as-a-service (SaaS) companies grow globally by taking care of payments, checkout, subscription management, and licensing, has raised $68 million in a series C round of funding led by FTV Capital.
The raise comes in what can only be described as a blockbuster year for SaaS companies, powered substantially by the push to cloud computing and the rapid embrace of remote working. Recent Gartner data indicates that the SaaS market is on track to hit $105 billion in 2020, a figure it projects to rise by 18% in 2021.
Founded out of London in 2012, Paddle’s core raison d’être is to enable subscription-based software companies to focus entirely on building their product by spending less time on the billing and back-end side of things. Instead of piecing together various components from third-party providers, SaaS companies can use Paddle as a single platform through which they can access payments, invoicing, subscription management, tax and financial compliance, fraud detection, and more.
“We make it easier to expand abroad by handling all aspects of international payment infrastructure,” Paddle CEO and cofounder Christian Owens told VentureBeat. “This reduces costs but it also means you do not need to set up multiple business entities and local merchant accounts across geographies, which can be a major headache for a business expanding rapidly into multiple markets.”
As with other companies operating in the SaaS space, Paddle too has enjoyed an upward tick in its fortunes, reporting a 26% increase in sales from existing sellers on its platform during the pandemic, while its overall number of sellers has risen by 50% year-on-year.
How it works
Through the Paddle dashboard, companies can create and style how their checkout experience will look to the end user.
Through the back end, SaaS companies can dig down into all their subscription revenues by market. At any time they can edit their plans’ pricing across 245 countries and territories.
Ultimately, Paddle is designed to enable businesses to circumvent costly and burdensome localization endeavors — even the best software in the world will struggle to gain traction internationally if it’s difficult for users to sign up and pay. And even if a company is only targeting domestic customers, it can still face significant hurdles in terms of the myriad tax structures they have to deal with across states.
“In Texas for instance, there are 1,700 separate tax jurisdictions alone, and there’s no unified tax filing process for international businesses,” Owens said.
The state of play
There is no shortage of online solutions for companies wishing to sell software internationally, with the likes of Stripe offering various payments and billing services for SaaS-based businesses. However, Paddle approaches things very much with a “unified” mindset — it acts as the merchant of record by not only calculating sales tax, but also filing and remitting it in each local jurisdiction, and indemnifying the seller from all liabilities globally. In short, all this saves a lot of extra paperwork for companies that really just want to focus on building out their product. Similar players in the space include Santa Barbara-based Fastspring, a legacy provider that was bought out by Accel-KKR back in 2018, and 2Checkout, which was bought by Verifone just a couple of months ago.
Prior to now, Paddle had raised around $25 million. With another $68 million in the bank from backers that include Kindred Capital, Notion Capital, and 83 North, the company is well-financed to expand globally, with a particular focus on the U.S. market.
To date, Paddle said it has secured more than 2,000 customers globally. Most of them are B2B companies such as visual design prototyping platform Framer, but Paddle does have some clients in the B2C sphere, including Mac and iOS software maker MacPaw.