Belgium-based Odoo decided to use open source tools as a way to attack the enterprise resource planning (ERP) software market against giants like SAP. Decades later, the company has now raised 500 million euros (approximately $527 million at current exchange rates) in secondary investment from CapitalG (Alphabet's venture fund), Sequoia Capital, and other investors .
The new funding is expected to raise its valuation to 5 billion euros ($5.26 billion). Yes, that's right.
With over 5 million users and 40% annual growth, Odoo's business is actually so good that it hasn't had to raise any primary capital in eight years. Billings are expected to exceed €650 million ($685 million) in the next 12 months and aim to reach €1 billion ($1.05 billion) by 2027 . It was previously valued at 3.2 billion euros ($3.37 billion). round.
So why is Odoo raising so much funding now? The company said this investment will be used to accelerate research and development and product development. This is likely keeping in mind how AI will disrupt regular ERP businesses.
As we recently reported, traditional ERP software tools, typically provided by IT system suppliers, are under attack from AI. For example, Cogna is a British startup that raised $15 million to use AI to uniquely create enterprise software apps.
Founded in April 2002, Odoo is the brainchild of Fabian Pinkars, who founded the company from his farm. He currently lives in India and directs his business from there.
Pinkers told CNBC that he is in no rush to go public despite the high valuation and earnings.
From humble beginnings as an open source project, Pinkaers has grown into a business software behemoth with over 80 apps across functions such as accounting, CRM, manufacturing, marketing, and an app store of over 50,000 community-developed apps. We've built Odoo all the way. Large community of developers and partners.
Most of Odoo's business comes from open source software (which can be accessed for free), with 20% coming from paid licensed software (also known as paid “Odoo Enterprise” products) for users who require additional functionality, etc. It's a thing.
“Fabian and his team have built a unique business based on an ambitious vision of a unified suite of tightly integrated business apps,” said Alex Nichols, Partner at CapitalG. This was stated in a standard statement accompanying funding.
Pinkcurse added on his company's blog: “ERP has traditionally been expensive to implement and resource-intensive, often failing to meet the actual needs and evolving requirements of small and medium-sized businesses. We have developed a unique value proposition that delivers.
Odoo last raised funding in 2014, when it raised a $10 million Series B round.
Also participating in this unusual new round are Alkeon, AVP, BlackRock, HarbourVest Partners, and Mubadala Investment Company.
Previous investors include Noshaq, Summit Partners, and Wallonie Entreprendre, who all sold secondary stakes to CapitalG and Sequoia as part of this round. Summit will remain Odoo's largest institutional shareholder.