‘Back of the Building’ SMB Solution Xentral Nabs $20 Million from Sequoia

It’s hard enough keeping track of all the companies here in the U.S. building cool stuff for small businesses. Even so, we’re always looking to learn about how startups around the world are solving problems for SMBs with software. In that vein, we just learned about a German start-up called Xentral that is focused on building easy to use software for the back of the building so to speak. The company recently nabbed a $20 million Series A round from legendary Silicon Valley VC shop Sequoia

Xentral’s core business is developing enterprise resource planning (ERP) software covering a variety of back-office functions for the small business. While we tend to hear more about software solutions that are helping small businesses with their front of the house software, we no doubt will see more and more software that handles some of the more messy and way less visible aspects of running a small business. 

From Hardware to Software

Xentral came about because its husband and wife founding team had a problem to solve in a previous startup. The couple founded a circuit board company in 2008. And as that company began to scale, the couple realized their back of the house systems couldn’t handle the swelling order volume. They knew about software like Shopify to help them with the front of the house. But they struggled to find easy to use software for the back of the house. 

As they created their own software, they began to realize that other small businesses could benefit from their labor. So by 2018, they decided to stop building circuit boards and focus on building SaaS software. After all, the SaaS business model, if you get it right, has superior economics to hardware.

The Shopify for ERP

Since its launch, Xentral has grown to 1,000 customers and 65 employees. Now the couple is ready to take the next step of development with the help of Sequoia’s capital. While the majority of the company’s 1,000 customers are in Germany, Xentral now has plans to expand its coverage to other European markets.

With a compelling solution that covers services like order and warehouse management, packaging, fulfillment, accounting, and sales management Xentral is now set to begin scaling its business. On top of geographical expansion, the company will invest in integrations to make its software easier to use and more valuable to customers. 

Benedikt Sauter, the co-founder and CEO of Xentral, described the company’s ambition this way. “To build a better ecosystem to help our customers run their own businesses better.”

The ERP market for small businesses is forecast to be nearly $50 billion by 2025. And with the acceleration driven by the global pandemic, we’d guess that we’ll see that forecast realized sooner rather than later. 

Here is what one of Xentral’s investors told Tech Crunch in an interview. “I see Xentral becoming the de facto platform for any SMEs to run their businesses online. ERP sounds a bit scary especially because it makes one think of companies like SAP, long implementation cycles, and so on. But here it’s the opposite. [Xentral is] very lean and easy to use because you can start with one module and then add more. For SMEs, it has to be super simple. I see this becoming like the Shopify for ERP.”

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