London-based m3ter launches from stealth with $17.5m funding to expand into new markets

London-based m3ter launches from stealth with $17.5m funding to expand into new markets

Published: 08-02-2022 13:43:00 | By: Pie Kamau | hits: 4610 | Tags:

m3ter, a metering and pricing engine for SaaS companies, launched from stealth with the announcement of $17.5 million in funding. The investment will support m3ter as it builds on significant early traction to expand into new markets, grow its team, and extend its product. Kindred Capital, Union Square Ventures and Insight Partners all participated in the round.

m3ter’s early traction corresponds with a rapid increase in the number of SaaS businesses switching to usage-based pricing (UBP). The pricing model is becoming popular because charging customers for what they consume allows for easier adoption, costless upsell, better margin control, and greater customer satisfaction. According to recent analysis, SaaS businesses that have implemented UBP are experiencing 29.9% year-on-year growth vs. 21.7% for other pricing models. In recent years, many of the software IPOs with the strongest net dollar retention – the likes of Snowflake and Datadog – have operated usage-based pricing, and today, usage-based companies are valued at a premium compared to other SaaS businesses.

Griffin Parry, Co-founder and CEO of m3ter said, “Usage-based pricing offers huge rewards for SaaS businesses, but it isn’t easy to implement. We experienced the pain ourselves when building our previous startup, but we also saw what good tooling can look like at AWS. Today, we're proud to launch m3ter so that all SaaS businesses can intelligently deploy and manage usage-based pricing.”

Despite its benefits, UBP is difficult to implement. Billing operations are challenging because usage data needs to be brought together with commercial terms, something that businesses too often manage in a spreadsheet ‒ a time-consuming, error-prone process that struggles with complexity and change. Delivering a good product experience necessarily involves providing customers with up-to-date information about usage and how it converts to spend, and that’s hard to do. At the same time, Sales and Customer Success teams struggle to do their jobs without easy access to customer usage data, and revenues are near-impossible to predict without reliable forecasts of future usage and spend.

Chrysanthos Chrysanthou, who led the investment from Kindred Capital said, “The m3ter co-founders are repeat entrepreneurs with a deep, first-hand understanding of the struggles associated with usage-based pricing. With their technical ability and commercial track record, they’re uniquely placed to carve out a position of leadership in a market that’s fast taking shape as SaaS businesses look for a solution to their pricing woes.”

m3ter addresses these common issues and makes usage-based pricing easy for any software business. It provides data infrastructure that captures granular usage and cost data at scale, enables complex pricing configuration, and calculates bill amounts in near real time. This feeds systems throughout the stack, including the billing and finance system (to automate billing operations), SaaS platform (to deliver billing dashboards to end customers), and Sales CRM and Customer Success platforms (to allow smart, well-informed and timely conversations with customers). Implementation is straightforward, with a flexible API-based architecture and easy bi-directional integrations with common tooling.

Rebecca Kaden, partner at Union Square Ventures, said: “m3ter has the potential to supercharge the SaaS industry as more software businesses capture their true value through frictionless usage-based pricing. Griffin and John have built a great team, and we’re excited to work with them to redefine pricing for SaaS companies around the world.”

m3ter was co-founded in London by Griffin Parry and John Griffin, repeat entrepreneurs who previously built and sold a back-end-as-a-service business, GameSparks, to AWS. Its Chief Data Scientist, Rob Franolić, brings twenty years’ advanced analytics experience to the team, and the company’s engineers are led by AWS and GameSparks alumni. While in stealth, m3ter has already attracted customers including Sift, Stedi and Redcentric, as well as kicking off a partnership with revenue delivery platform, Paddle.

Zack Kanter, who also invested in m3ter, is founder and CEO of Stedi, an early customer. He said, “We chose m3ter because they were the only provider that treated the problem of billing for metered pricing as a data problem, not a billing problem - which is the only way to solve it with any degree of scale and complexity. Combine that with their ability to execute based on their own roadmap and feedback, and we see this as a solution that will continue to compound for many years.”

The funding will help the company to build on its early traction and meet growing global demand for its product with new hires in Europe and the US. Designed from inception for applied data science, m3ter will also use the funding to further the development of advanced analytics tooling for Sales and Finance teams. New features will allocate costs algorithmically to provide insights into unit economics; deliver pricing recommendations that improve results at the individual customer level; and provide revenue forecasts based on usage signals to improve business predictability.

Christian Owen, Founder and CEO, Paddle: “At Paddle, we believe that deploying UBP will drive the next phase of acceleration and growth in SaaS businesses. That’s why we partnered with m3ter to integrate their best-in-class usage-based pricing, metering and rating engine together with our platform.”