Agiloft is a SaaS company offering enterprise-level contract lifecycle management (CLM) software with no coding required for its customers to use it.
- The private company, Agiloft, achieved $36 million in annual recurring revenues (ARR) during 2020.
- The 30-year-old company raised $45 million in 2020 as its first capital raise from outside investors.
- Agiloft is on track to increase revenues year-over-year by 50% to achieve $50 million in ARR for 2021.
Saving Money on the $100,000+ in Legal Fees per Contract is Not Trivial
CLM is the creation and management of contracts mostly between B2B organizations. These contracts define the relationships between companies. Negotiating and agreeing to one of these contracts can cost a company more than $100,000 in attorney’s fees.
The Agiloft suite of software tools improves CLM for B2B contracts. Enterprises that use Agiloft increase the efficiency of their legal departments with better compliance, improve procurement efforts, and accelerate sales cycles.
Agiloft Has One Founder
Agiloft’s sole founder and CEO, Colin Earl, is a software industry veteran with 25 years of experience as a developer, product manager, and CIO. He worked at IBM, General Electric, and three start-ups before founding Agiloft. Agiloft is a leader in CLM and featured in the Gartner Magic Quadrant.
Founded in 1991
Agiloft launched as a consulting group in 1991. Earnings from the consulting business funded the development of Agiloft software. The first software product was a system for customer service management. The profits from the sales of that product financed the development of the Agiloft CLM SaaS suite.
About 200 Current Employees with 50 Software Engineers
In 2021, there are about 200 Agiloft employees, with in-house software engineers making up about 25%, or about 50, of the total workers.
Number One Ranking in the Gartner Magic Quadrant Two Years in a Row
In 2020, Agiloft achieved number one ranking in the Gartner Magic Quadrant for Contract Life Cycle Management for providing critical enterprise CLM capabilities. In 2021, Agiloft was once again named the leader with the number one ranking in the Gartner Magic Quadrant for Contract Life Cycle Management compared to 15 CLM competitors.
50% Year-Over-Year Revenue Growth
During 2021, the company is experiencing more than 50% year-over-year growth in revenues. For 2020, there was a 40% year-over-year growth in revenues. This growth came from increased demand from existing customers plus rapidly adding new customers.
Annual Revenue Growth from $1 to $50 Million
Here is a table showing the revenue growth milestones.
|2021||$50 million (projected)|
1,500 Organizations as Customers
There are more than 1,500 customers, with a total of over three million individual users, for Agiloft’s CLM suite. Customers include various organization sizes, from the largest enterprises to small and midsize businesses (SMBs), including start-ups.
Examples of enterprise-level customers include the U.S. Air Force, CDW, Chevron, Kaiser Permanente, and Valero Energy.
Agiloft customers come from the following industry sectors:
- Finance and Legal
- Food & Beverage
- Real Estate
- Utilities & Energy
Annual Customer Value Up to $1 Million
A customer can get started with Agiloft by paying as little as $1,000 to $2,000 per month. The annual customer value (ACV) ranges from $24k to about $1 million. The pricing level depends on the number of seats and the software version used. Enterprise customers that use the Agiloft API may pay up to $1 million per year for the full, enterprise-wide, Agiloft system deployment.
More Than 100% Customer Retention Rate
New clients come to Agiloft by registering on the company’s website and then getting a follow-up call from a product specialist or a sales specialist. The Agiloft net retention rate is over 100% and has been this strong for many years. It is possible to get this retention rate up to 125%.
Getting the net retention rate higher depends on saturation. A customer may start with one deployment of the Agiloft CLM suite in a single division of a multinational company and then grow to full enterprise-wide deployment with the associated extraordinary multiples.
However, if a new Agiloft customer starts with an enterprise-wide deployment, the growth rate depends on how fast the enterprise customer grows unless Agiloft develops new products.
How about Agiloft offering a $100 per month self-service tool?
There are no plans for a low-cost self-service tool because the Agiloft suite has a design to meet the needs of sizable enterprises with complex requirements, complex workflows, and demanding workloads. This level of complexity necessitates a certain level of sophistication in the product. The Agiloft software is not a great fit for extreme low-end customers’ use.
$45 Million in Funding Raised in 2020
Agiloft received $45 million in funding from FTV in 2020. Previously, the company was self-funded. This amount represents a factor of 1.25 applied to the $36 million ARR. The private company’s valuation for this one and only funding round in 2020 was more than a 10x multiple but less than a 20x multiple.
The shareholders in the company are now CEO Colin Earl (who is still the largest shareholder post-funding), FTV, and Agiloft’s employees.
Initial 10% Equity for the Employee Stock Ownership Plan More Than Doubled
Since its inception, the company has shared equity with employees. Part of the Agiloft culture is that every employee gets some equity in Agiloft.
At the company’s inception, employees had 10% of the equity. As the company progressed, the equity allocated for the employee stock ownership plan (ESOP) more than doubled.
The investment made by FTV was partially secondary. Millions of dollars went to existing employees for the shares they sold, and a fair portion went to CEO Colin Earl for some of his shares as well.
Why did the company decide to set up a 10%+ ESOP?
Right from the beginning, a core initiative of the company was to align the employee’s self-interest with the company’s interests and the company’s customers’ interests. From inception, 10% of the equity ownership was in the ESOP.
This ESOP worked out well. The CEO said he would do it the same way if he had to do it again, except maybe raise some outside capital sooner.
The ESOP expanded as the company grew to bring on more key employees. The decision regarding ESOP expansion was made by analyzing what it would take to make the company look very attractive to potential employees. Also, the company estimated how many employees were necessary to achieve the next level of revenue.
Maintaining 50% Year-Over-Year Revenue Growth
CLM is a rapidly evolving market. The company brought in the FTV investment of $45 million to keep pace with the market growth. Part of the funding was a secondary offering to reward the founder and employees, but this was not the main goal. The goal was to get enough money for the company to expand rapidly.
CEO Collin Earl says that growth is expensive. If you want it, you must go into the red from a GAAP perspective. You will run into a cash flow issue at a certain point, so you have to raise investment capital and build the balance sheet.
To be comfortable doing this, the founder needs to pull in enough secondary money to cover retirement. This strategy is how Collin Earl recommends other founders think about this.
The company’s expansion plans are to add meta management and case management as adjacent products to CLM. Additions will improve the CLM suite that is closely tied to CLM and involve contracts and negotiations.
June 29, 2021 Milestone – Agiloft Available on Amazon Web Services Marketplace
At the end of June 2021, Agiloft’s CLM suite became available on the Amazon Web Services (AWS) marketplace. Existing AWS customers can now easily subscribe to the Agiloft SaaS system to deploy the Agiloft CLM suite. This AWS-powered offering is a cost-effective way for organizations to manage the legal, sales, and procurement processes involving B2B contracts.
Agiloft is an Overnight Success Story 30 Years in the Making
It took ten years from inception to reach $1 million in annual revenues. Then, about five years more to reach $10 million in yearly revenues from software product sales. Then, in 2017, annual revenues started to go up substantially to $20 million from the SaaS Agiloft CLM suite sales.
Now that Agiloft is the industry leader in CLM, the momentum of being the best is propelling the company forward. With the help of outside investors in 2020, for the first time in the company’s history, Agiloft is now doubling down on growth.
Some sage advice for entrepreneurs from Agiloft’s CEO Colin Earl is “Look at the conventional wisdom to learn from it and then, be willing to reject it.”