Helping SaaS Companies Grow Through Revenue Sharing: Avangate CEO Carl Theobald (Part 7)

Sramana: How does your affiliate market help entrepreneurs grow their business?

Carl Theobald: Affiliates are really a reflection of how this new online world is not only leveling the playing field for start-ups, but providing the resources for entrepreneurs to focus on what they do best and outsource the rest. In this case, they can outsource marketing. In the consumer world we have affiliates such as CNET and Download.com, TopTenReviews, MacUpdate, BitsDujour, as well as geographic specific affiliates, such as SiliconAction in Brazil. Startups of ours, ones with three to four developers building great code, will often leverage the Avangate Affiliate Network to be their virtual marketing team to drive awareness. Perhaps the most useful feature for start-ups is that Avangate only gets paid on a revenue share basis on the business we can drive.

Sramana: Who is your most effective affiliate partner who converts really well?

Carl Theobald: It depends on the sector, such as security or multimedia. We have several that do very well and the biggest key here is to find an affiliate that matches the market that you are targeting. It’s not so much a single affiliate; rather, the emphasis should be on the right relationship.

One example I can think of is Majorgeeks. They are an affiliate that works closely with one of our Asian consumer utilities and security solutions. Majorgeeks helped raise this company’s brand awareness driving over 150% boost in sales over a three-month period by sharing the download traffic on the merchant’s website, running special discount offers on the Majorgeeks site to their extensive community, and running display advertising campaigns on Majorgeek’s websites and forum. Affiliates can impact the top and bottom lines of a company significantly. On average, software companies drive 15% to 20% of their revenue via affiliates, and some of our vendors get up to 95% of their revenue through affiliates.

Sramana: Where are you in terms of the growth of your business?

Carl Theobald: Our revenue has been growing at a rate of about 70% a year, and we expect to continue with that growth rate for the next couple of years. We are in the $10 million to $50 million dollar range in terms of revenue. We are growing the company to take it public. Our plan is to file in 2015 with an IPO in 2016.

The number of SaaS companies coming into the market is tremendous, and that really plays out well for us. Businesses are starting to act more and more like consumers with their software purchases. We are seeing B2B software companies making the move to build an online business, just like 20 years ago when B2C companies made that move. In our view, the market is growing at a rate of 30% a year. That is a great market to be in. We are very bullish on the future and excited about our plans.

Sramana: Great. This has been a fantastic story; thank you for sharing it with us. Best of luck as you press forward.

This segment is part 7 in the series : Helping SaaS Companies Grow Through Revenue Sharing: Avangate CEO Carl Theobald
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