Coupa Adds $22 million to War Chest, Shares Strategic Direction (Part 1)

Earlier today, Coupa (the fastest growing eProcurement software provider in net new customer wins by our calculations, including Ariba, SAP, Oracle and others), announced that it had raised $22 million in its latest round of financing. According to the announcement, the Series E financing round was “led by new investor Crosslink Capital with existing investors Battery Ventures, BlueRun Ventures, El Dorado Ventures and Mohr Davidow Ventures also participating.” While terms of the round were not disclosed, “the latest valuation was a very significant multiple of previous rounds,” according to the announcement.

Coupa’s momentum undoubtedly contributed to the high valuation and multiple. At their customer roadshow in Chicago last week, Coupa shared that year-over-year bookings are up over 180% and platform usage has increased by over 150%. But how will the new funding round support Coupa’s strategic direction? Spend Matters put the spotlight on Coupa’s CEO, Rob Bernshteyn, earlier in the week. We asked him some pointed questions around how and where he intends to spend (or not spend) the war chest, including planned areas of product expansion.

Rob Bernshteyn, Coupa’s CEO (Caught on a Day Not Wearing a Tie)

Spend Volume ($/billions) Going Through Coupa Quarterly

Rob focused the discussion on his view of building organically from the core and the value of a single platform solution that could be deployed rapidly with the ability to switch on completely integrated new modules and capabilities quickly. In Rob’s words, what is “even more important than the breadth of features and functions themselves is delivering solutions on an organically developed fully integrated cloud platform which relies on a common data model, access control, and usability.” In this regard, “the interoperability of Coupa’s new modules is going to be a key focus to drive differentiation” and users can expect when they purchase a new module, that it will “be ready to go” and a “tab will appear” instantaneously (with third-party data integrations and process configuration layered on, as required).

We’ll save some of the product enhancements that are coming down the Coupa pike for Part 2 of this post. Coupa’s expansion (in Rob’s view) will not just focus on new product areas, but also on ramping the commercial team to enable the P2P upstart to better compete with the large sales organizations of its bigger rivals. Rob told Spend Matters that Coupa had added eight salespeople already this quarter and plan to have between 40-50 quota-carrying reps by the end of 2012, an increase of over 100% from the end of 2011. Coupa is taking a more conservative approach to international growth, with only a few salespeople in Europe at the moment. As we hear more from Coupa in Europe, Peter Smith will be sure to share what he learns over on Spend Matters UK/Europe.

Aside from direct sales, channel expansion is at the top of the priority list and “we can expect quite a bit of activity” in this regard. To date, Coupa has worked with some of the larger consulting firms and systems integration providers, but has yet to develop what we would describe as a comprehensive channel and VAR program. As Coupa scales and puts its latest funding round to work, we suspect getting in close to the larger consulting firms, SIs and BPOs will become increasingly important.

Spend Matters believes Coupa’s latest funding round positions it well for the battles ahead, especially those where companies will be asked to select from the very different mindsets and views of the ERPs relative to Coupa. It will also help alleviate any concerns customers might have over vendor viability and IP/patent issues (a topic we’ll cover in the coming weeks). But perhaps most important, the round should provide Coupa with the ability to more aggressively build out its functional footprint.

This is important, as Coupa will increasingly face competition from rivals such as Ariba and SAP, which have invested significant sums in new UIs, making their user experience more Coupa-like later in 2012. For this reason, Coupa will need to continue to pull the innovation lever in new product areas to stay ahead of the game. This may include functional build-out (e.g., e-invoicing, supplier network, analytics, contract management), but it will also include continued enhancement in areas at the core, including social connectivity and community.


The Coupa Buying Cockpit

Socially, Coupa shared that their social roadmap calls for the ability for users across organizations (and within, depending on permissions and controls) to “exchange best practices, make judicious use of aggregate data and capture and streamline communications across organizations.” Look, for example, for “Yelp-like” supplier and item ratings shared across the community based on a variety of potential areas and showcasing a variety of potential vendor KPIs.

Personally, I think the comments could be as important as the ratings in such a scenario (which might lead to better vendor selection decisions in the first place, focused on total cost and not unit cost). I can almost see a Yelp-like string of commentary around an office products vendor: “I love this paperclip. But it’s not the one we contracted for. Well, it sort of it is. It has all the characteristics of what we negotiated into our agreement. But they changed the SKU number on us. Come to think of it, they change the SKU number on us at least once a year.” Perhaps Coupa’s future social community will bring a level of group policing to vendors in certain categories that are famous for somewhat nefarious behaviors.

Stay tuned for Part 2 of this post when we share what some of the functional areas of enhancement for Coupa might look like.

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Obsessed with how companies manage, spend and save money, Jason writes about procurement, trade and supply chain issues @ Spend Matters. He has significant first hand experience developing and marketing technology and services products, has advised numerous companies on sourcing and related techniques as well as M&A pursuits.  In previous lives before tech, he was a management consultant and merchant banking analyst.