Alphabet’s VC arm backs little-known SAP rival Odoo, boosting valuation to $5.3 billion

Odoo, a startup taking on SAP in the realm of enterprise software, boosted its valuation to 5 billion euros ($5.3 billion) in a secondary share round led by Alphabet‘s venture fund and Sequoia Capital.

The Belgium-based company develops open-source enterprise resource planning software, with over 80 applications available on its platform offering businesses tools for accounting, customer relationship management, human resources and e-commerce and website building.

Fabien Pinckaers, CEO and co-founder of Odoo, told CNBC in an interview this week that his company didn’t have a need to raise any primary capital as it is “cash profitable” and growing revenue at a rate of 50% year-over-year. Enterprise resource planning, he said, is “still a very fragmented market.”

“The reason everybody [has] failed [in this market] is that it’s quite complex,” Pinckaers told CNBC. “Small companies have complex needs from accounting to inventory, to website, e-commerce, point-of-sale. It’s a lot and they don’t have budget, and they need something that is simple and affordable.”

“Nobody succeeded to get both,” he added. “You have complex products like SAP that run well for large companies. But it’s complex and expensive.”

Andrew Reed, partner at Sequoia Capital, added that the market Odoo is addressing “just requires more gestation time than most startups both because the core system is very complex, and making it simple to use for small businesses and various countries is no small feat.”

Odoo “is not your traditional Silicon Valley tech story,” according to Reed.

Pinckaers opened the company’s first-ever office 22 years ago on a farm in Belgium. That was all he could afford at the time. Later, as the company started bringing in revenue, Odoo opened two additional offices in Belgium, home to the firm’s research and development, support and technical teams.

Today, Pinckaers resides in India with his family. He’s lived there for a year now, working to expand the company’s presence there, hiring more people, increasing marketing and broadening Odoo’s overall partner network.

Odoo had billings of 370 million euros last year and is on track to top 650 million of billings in 2025 — after that, the company is hoping to top the 1 billion-euro billings milestone by 2027. Billings — or the total sum of all invoices for a given year — is Odoo’s preferred metric for tracking annual revenue performance.

Around 80% of Odoo’s business today accounts for open-source software, with the remaining 20% coming from software licensed for a fee, Pinckaers said. Open source refers to a type of software that allows users to access the underlying code — most often free of charge — which they can then modify and adjust.

Despite Odoo now being at the scale of an IPO-ready business, Pinckaers said he’s in no rush to take the company public. If anything, remaining private has given Odoo flexibility to stay focused on investing for the long term, he said.

Odoo’s private backers aren’t in a rush for the firm to go public, either. Alex Nichols, partner at Alphabet’s CapitalG, told CNBC that he’s not worried about “IPO timing,” adding that factors like public market conditions are ultimately “out of our control.”

Pinckaers built the business to the size it is today primarily by bootstrapping — that is, growing without raising external funding. Odoo hasn’t had to raise primary capital from investors in a decade, opting instead to let early investors and employees sell shares in secondary sales.

The last time Odoo secured primary funding was in 2014, when it raised $10 million in a Series B round. Prior to the latest secondary round, Odoo was most recently valued by investors at 3.2 billion euros.

Odoo’s other backers include the likes of private equity firms Summit Partners, Noshaq, and Wallonie Entreprendre, which all sold a portion of their shares to CapitalG and Sequoia as part of the 500-million-euro investment announced on Wednesday.

Even after selling a portion of its shares, Summit remains Odoo’s largest institutional shareholder. Pinckaers himself has never sold his own personal shares.