Totango Picks Up $15.5M

This morning Totango, a company that helps SaaS companies track customer engagement to find and fix user flow errors and friction, announced that it has raised a $15.5 million Series B round of funding, led by both Canvas Venture Fund and InterWest Partners.  The round was participated in by prior investing groups Pitango Venture Capital and Gemini Israel Ventures.

Totango, a dual Israeli and United States-based startup, previously raised a $3.8 million Series A round of funding in 2011, making the raising of its current crop of capital in line with normal timings. Totango, which currently has an office in Silicon Valley, made the trip across the ocean to establish itself in the United States in 2012.

In the view of Totango, the rising SaaS economy includes an implicit promise to provide ‘value’ to consumers of service products on a continuing basis. What that means is simply that if you sell a service on a subscription payment, the issue of customer happiness is never over. This makes logical sense; in the era of Software In A Box, a sale was a sale. Now, SaaS customers have rival options they can switch to with general ease, and so keeping an eye on your current customers is not merely a way to lower churn, but instead to keep the companies closest to your product happy. They do talk, after all.

That’s the space that Totango wants to operate in. Its solution to the issue of continuing value is a sensor-like network internal to SaaS company’s products that tracks individual customer’s actions, flagging issues; if your customer stops using your service, or begins to use it in a markedly different fashion, it could be a sign of their unhappiness, or confusion. And an unhappy or confused customer is one out the door. Totango wants to turn data into actionable business intelligence.

I spoke with the company on the advantages and issues of having offices in both Israel and Silicon Valley. According to its CEO Guy Nirpaz, Israeli companies specialize in data-focused startups, making his company well fitted to the country’s niche. That said, Israel is an island, in Nirpaz’s estimation, meaning that products created there have to be sold outside its borders. This makes having offices out of the country a must, explaining the company’s expansion outside of its original nation state domicile.

The only surprising things about Totango — itself a SaaS business — raising eight figures of capital is that its new funding stack starts with a 1. Companies that are enterprise-facing are raising huge sums at the moment, across the SaaS market niche. Presuming that Totango hits its requisite growth figures, it will have access to more funds when it desires. That assumes market conditions remain stable, of course.

So as I tend to end posts of this import, Totango has the capital it wanted. Now it’s a game of execution. Let’s see what the team can cook up.

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Originally published at https://techcrunch.com/2014/02/05/totango-picks-up-15-5m-more-to-grow-its-product-focused-on-preserving-saas-customer-value/