Will Vlocity Be Acquired By Salesforce?

According to a recent IDC report, healthcare, public sector, finance, retail and wholesale, and manufacturing sectors are estimated to have spent $37.5 billion on industry cloud solutions in 2018. San Francisco-based Vlocity is a leading industry cloud solutions provider that recently joined the Billion Dollar Unicorn club.

Vlocity’s Offerings

Vlocity was founded in 2014 by former Siebel and Veeva Systems co-founders and experts Craig Ramsey, David Schmaier, James Ramsey, Mark Armenante, and Young Sohn. The founders’ former association with Siebel and Veeva helped them understand and appreciate the importance of a vertical strategy. Siebel was known for its vertical-specific offerings and Vlocity founders decided to replicate this on a cloud platform. Veeva was already a thriving example of a vertical-based solutions built on the Salesforce platform.

I had met with Vlocity’s CEO and co-founder David Schmaier a few years ago. He mentioned how Vlocity was founded on the principles that best customer experiences are industry-specific and omni-channel.Salesforce took care of the omni-channel segment of this requirement and Vlocity focused on catering to the industry-specific segment. Vlocity has been focused on delivering industry-specific cloud and mobile software that embed digital, omnichannel processes for customer-centric industries. Its solution has been built on and in partnership with Salesforce.com’s Force platform. Vlocity itself is one of Salesforce’s fastest growing partners.

Within two years, Vlocity had established four key industry-specific solutions. Today, it caters to five industry solutions – communications & media, energy & utilities, health, insurance and financial services, and Government and non-profit. Its products are helping these industries improve the overall customer experience across all channels. It is a Fortune Cloud 100 company that caters to more than 150 customers including big names like Sky Italia, New York Life and Humana. It has more than 700 employees spread in more than 20 countries.

Vlocity’s Financials

Vlocity was initially funded using $10 million seed fund that the founders funded themselves. Since then, it has raised $163 million in four funding rounds from investors including Bessemer Venture Partners, Accenture, Salesforce Ventures, New York Life Investment Management, Sutter Hill Ventures, TDF Ventures, Wildcat Venture Partners, and Kennet Partners. Its last round of funding was held earlier this year, when it raised $60 million at a valuation of over $1 billion. The round was led by Sutter Hill Ventures and Salesforce Ventures with participating funding from Accenture and New York Life. Vlocity plans to use the recently acquired funds to invest in product development. A $50 million funding round held in 2016 had valued the company at $587.5 million.

Being privately held, Vlocity does not disclose its financials. But analysts estimate that it is trending at $100 million annual revenues and expects to double that by the end of the current year.

When I met with David earlier, he mentioned how Vlocity was looking to build five Veevas in parallel. Today, Vlocity has not only built industry specific solutions but also deep customer relationships and has become a trusted partner of these industries through its domain expertise. There aren’t many competitors for Vlocity. Veeva remains its largest and most formidable, healthcare vertical competitor.

Vlocity’s growth is a classic example of how third-party developers and platform companies have benefited from the opening of cloud-based platform solutions. The Salesforce ecosystem lets Vlocity build industry specific solutions that attract and retain customers within these industries while allowing Salesforce to focus on its core platform.

Salesforce is driving towards its $20 billion revenue milestone. Companies like Vlocity help it reach that goal faster. The two appear to have already built a strong, mutually beneficial partnership. I think Salesforce would look at acquiring Vlocity as a means to attain this growth.

For Salesforce to continue to grow rapidly, besides horizontal expansion, it will need to look at a vertical focused strategy. Last year, it initiated a reorganization where it made senior management changes to lead go-to-market efforts around core verticals. Salesforce believes that by focusing on verticals, it will be able to double its revenue within a couple years. Vlocity’s acquisition by Salesforce will give Salesforce just that – access to industry revenues through deeper inroads into key verticals.

Looking For Some Hands-On Advice?

For entrepreneurs who want to discuss their specific businesses with me, I’m very happy to assess your situation during my free online 1Mby1M Roundtables, held almost every week. If you are visiting the San Francisco Bay Area, come meet me at an upcoming Rendezvous meetup. You can also check out my LinkedIn Learning course here, my Lynda.com Bootstrapping course here, and to follow my writings, click Follow from here.