Small businesses have historically been an underserved portion of the commercial landscape, but the increasing accessibility and ease of deployment offered by cloud-based solutions have begun to alter this situation in recent years. Currently, a particularly promising European startup focused on creating software to assist small and medium-sized enterprises (SMEs) in managing their online operations has announced a new round of funding to further capitalize on this opportunity and address the expanding needs of the SME sector.

xentral, a German company specializing in the development of enterprise resource planning (ERP) software designed to cover a range of back-office functions for typical online small businesses, has secured $20 million in Series A funding.

The company’s current platform provides functionalities such as order and warehouse administration, packaging, fulfillment, accounting, and sales management. The majority of its 1,000 clients are located in Germany and include direct-to-consumer brands such as YFood, KoRo, the Nu Company, and Flyeralarm.

However, Benedikt Sauter, co-founder and CEO of xentral, stated that the company’s goal is to broaden its reach throughout Europe and eventually into other global markets. They also intend to integrate additional services into their ERP platform, including a more robust application programming interface (API) to facilitate greater integration with other services—particularly for businesses that sell across multiple channels like their own websites, Amazon, eBay, and social media platforms—to expand their market presence.

His primary focus, he explained, is for the startup “to develop a superior ecosystem that empowers our customers to operate their businesses more effectively.”

This funding round is led by Sequoia Capital, with Visionaires Club, a Berlin-based venture capital firm specializing in B2B investments, also participating.

This investment is significant as it represents Sequoia Capital’s first European investment since formally establishing operations in the region. (Prior to this, Sequoia had invested in several European startups, including Graphcore, Klarna, Tessian, Unity, UiPath, n8n and Evervault, but these investments were made remotely.)

xentral, based in Augsburg, has been operating as a startup since 2018, and the term “startup” is central to its story.

Benedikt Sauter and his co-founder, Claudia Sauter (also his wife), initially created the service’s early prototype for their own use.

The couple had previously established a hardware business in 2008, focusing on the design and sale of circuit boards and other hardware components for computers and connected devices. Around 2013, as their business began to grow, they recognized the need for improved tools to manage backend operations, allowing them to dedicate more time to product development.

However, Benedikt Sauter soon encountered a challenge: while solutions like Shopify were available to manage the front-end of e-commerce, there was a lack of a comprehensive, user-friendly solution for the numerous backend processes (particularly considering the state of the market eight years ago, before Shopify expanded into these areas). With a background in hardware engineering, Sauter decided to develop the tools he required.

The Sauters utilized these tools for several years, and eventually began receiving unsolicited inquiries from other online businesses interested in using the software. This led them to balance their hardware business with the software offering until around 2017/2018, when they decided to discontinue the hardware operation and concentrate on the software full-time. This marked the official launch of xentral, which now employs approximately 65 individuals dedicated to platform development and serves 1,000 customers.

xentral aims to provide a platform that is simple to implement and use for any online-selling SME. Sauter emphasized, however, that a key factor is having at least one individual within the business who understands and champions the benefits of ERP. “It’s fundamentally a matter of perspective,” he stated.

The challenge for xentral lies in attracting more businesses to its platform and leveraging its tools, while also competing with other companies targeting the same market. (Other companies in the ERP for small businesses space include online payments provider Sage, NetSuite, and Acumatica.) The overall ERP market is projected to reach $49.5 billion in value by 2025.

Sequoia and its new European partner, Luciana Lixandru—who will be joining xentral’s board alongside Visionaries’ Robert Lacher—believe there is a significant opportunity to create a new type of provider from the ground up, specifically within Europe, to address the needs of that region.

“I envision xentral becoming the standard platform for SMEs to manage their online businesses,” she said in an interview. “ERP can seem intimidating, often conjuring images of companies like SAP, lengthy implementation processes, and so on. But this is quite different.” She describes xentral as “very streamlined and easy to use because you can begin with a single module and add more as needed. It needs to be incredibly simple for SMEs. I believe this could become the Shopify of ERP.”