Summit Invests $215M in Odoo - Valuation Exceeds $2.3B
The Rise of Open Source Business Software: Odoo Secures $215 Million
Open source principles are increasingly influential within the IT sector, and a startup leveraging this model for business management software has recently announced a significant secondary investment following substantial growth.
Odoo's Funding and Valuation
Odoo, a Belgium-based company offering a comprehensive suite of open-source business software – encompassing areas like inventory, ERP, human resources, CRM, and marketing – boasts over 30,000 applications. The company has received $215 million in funding from Summit Partners.
This investment is a secondary transaction, meaning Summit Partners acquired shares from current investors, namely Sofinnova Partners and XAnge. Odoo maintains profitability and did not require additional capital through equity dilution, as explained by CEO and founder Fabien Pinckaers. This funding round values the startup at over €2 billion (approximately $2.3 billion), establishing Odoo as Wallonia’s first unicorn – a noteworthy achievement signifying the tech landscape’s decentralization.
Summit Partners previously invested $90 million in a similar secondary share purchase in 2019.
A Unique Open-Source Model
With a user base of 7 million, Odoo exemplifies the benefits of economies of scale within successful open-source projects. However, it distinguishes itself through a unique approach.
Odoo provides a free, open-source version of its software containing roughly 80% of its features. A paid, proprietary version unlocks the remaining 20% of functionality. Detailed pricing information is readily available.
While 90% of Odoo’s customers utilize the free tier, the remaining 10% subscribing to the paid version generate sufficient revenue to sustain growth and continued investment without further equity offerings.
Focus on Non-Technical Users
Odoo’s approach is particularly noteworthy because it targets users beyond the traditional developer community. The software is designed for professionals across various workplace functions, rather than solely for engineers.
“We are one of the only exceptions of open source built for nontechnical users,” Pinckaers stated.
Channel Partnerships and Community Growth
Odoo distributes its software both directly through its SaaS platform and via an extensive network of channel partners who host the services themselves. The appeal to these partners stems from the free nature of Odoo, offering a competitive advantage over established players like SAP, Microsoft, and Oracle, and facilitating the provision of additional paid services.
Currently, Odoo collaborates with nearly 4,000 partners and benefits from contributions from over 90,000 community members.
Continued Expansion and Future Focus
The company has experienced consistent growth, with revenue and customer acquisition rates of 50% over the past decade (and 63% over the last 15 years, since its founding in 2005). Odoo currently employs 1,700 individuals and plans to add another 1,000 this year. Billings are projected to reach €160 million in 2021.
Odoo’s future strategy centers on expanding its software offerings, with a particular emphasis on e-commerce and website development, areas where user-friendly, open-source tools are in demand.
Summit Partners' Perspective
“We are thrilled to support the Odoo team for this next phase of growth,” commented Han Sikkens, Managing Director and Head of Europe at Summit Partners. “We believe the future is bright, and Odoo clearly has the potential to disrupt the market led by software giants like SAP, MS Dynamics and Oracle.” Sikkens will be joining Odoo’s board of directors as part of this investment round.
