Software asset management, an area of enterprise IT designed, in part, to help companies save money, continues to make a lot of money. In the latest development, Xensam, a Stockholm startup that provides AI-based tools to help companies understand and track where and how software is used, has raised $40 million, its first external funding since its founding eight years.
The funding comes from a single investor, London-based Expedition Growth Capital. Oskar Fösker, CEO of Xensam, who co-founded the company with his brother Gustav (the CTO), said it will be used to continue developing its AI technology, hire more people (it now has 100 employees) and enter the US US market.
The valuation is not made public, but Fösker said he and his brother remain majority shareholders. The company itself has 200 customers (some of the biggest names including Polestar and Volvo’s Northvolt) and annual recurring revenue is growing at 126% annually, but it also doesn’t disclose actual revenue figures.
The world of software access management, which others in the industry sometimes call software spend management or license management, is crowded, especially because the problem being addressed is large and is being addressed for multiple reasons.
Organizations spent nearly $900 billion globally on enterprise software in 2023, and some in the field have estimated that, thanks to the explosion of cloud computing and software sold as a service, a larger organization may have hundreds or even thousands of different licenses under your roof.
This can have implications for disparate areas such as business spending, productivity, and the security of that organization, so it’s no surprise that we’ve seen a rush of startups and larger technology companies rushing to address the challenge of trying to track and understand the bigger picture of what is used, where and why.
Xensam itself started in that competitive fray. The two founders previously worked at another company called Snow Software, a big name in this space, which was scaling rapidly but, in their opinion, was losing pace when it came to cutting-edge developments, such as using AI to better track usage. of SaaS. .
“After a while it became clear that a hole was about to open in the market and no one showed any intention of filling it,” Oskar said. “This hole was going to be the first native SaaS player in the business.” Snow side note talking about potential valuations in this space: One of Snow’s biggest competitors was a company called Flexera, and last year Flexera acquired Snow after it was reported that Snow was looking to sell itself for around $1 billion . Flexera, meanwhile, was last valued at nearly $3 billion in 2020. Other big deals in this area have included IBM’s purchase of Apptio for nearly $4.7 billion.
Xensam’s approach is to use AI to comprehensively scan and understand what’s happening across an organization’s network, providing a real-time picture of thousands of applications that could be in use across on-premises and cloud environments.
“We are using AI for various parts of the technology,” Fösker said. “We’re using it to handle extreme amounts of data in the software normalization process,” which he describes as the process where raw data is normalized into standardized applications that are populated with metadata. “This is the key reason why we have been able to completely beat the competition.” He said he is also using AI on the front-end with a chatbot trained on his system and software licensing rules “can interact directly with the system and provide everything from system information to pre-built reports based on a specification.” open”.
He didn’t go into detail about what exactly he plans to launch next, or where he thinks there are gaps in the market, but he said he plans to launch more products in the second quarter.
His experience at Snow is also the reason why the company started its business until now. “We do not believe that a financial structure based on a Series A, B, C, etc. to survive it is a solid business model. It is based on too many external factors,” he stated. “We knew we would have to be financially stable… to be sustainable.”
The pivot toward finally accepting venture capital money, he said, was because they had already figured out the business model for themselves.
“We’ve seen a lot of companies raise money and lose a beautiful company culture while all the focus is on growth,” he said. “Therefore, it was very important for us to find an investor who also shared our cultural values, which we believe we have at Expedition.”
For its part, Expedition describes itself as the first outside investor in startups, meaning it works with many freelance founders, so it understands that model perhaps better than others.
“Xensam is one of the most impressive European growth companies we have come across,” Oliver Thomas, founder and managing partner of Expedition Growth Capital, said in a statement. “In the almost eight years they have been in operation, they have created a fundamental solution that allows companies with thousands of employees to track, monitor and manage software usage. “We are delighted to be working closely with the company as its first external investor and look forward to being part of its growth journey.”