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Metronome’s usage-based billing software finds hit in AI as the startup raises $43M in fresh capital

Date 01 Feb, 2024

Position Columnist

Metronome, a startup that helps software companies offer usage-based billing, has raised $43 million in a Series B funding round led by NEA.

Existing backers Andreessen Horowitz and General Catalyst also participated in the financing, which brings its total amount raised to over $78 million since its 2019 inception. 

Founded by Dropbox alums Kevin Liu and Scott Woody, San Francisco-based Metronome says it saw a 6x increase in ARR last year as more companies transitioned from subscription to usage-based models, or a combination of both. Its customers include startups such as OpenAI and Anthropic and enterprise companies like Databricks and Nvidia. Initially, Metronome worked with startups but last year expanded to the enterprise.

“We were fortunate to see that growth during what was otherwise a tough year for SaaS,” said Liu. “Companies have been cutting spend on ‘nice-to-have’ software, but we’re seen as a core driver of revenue opportunities for our customers. The rise of AI has also been a big factor (many AI companies are adopting usage-based models), as has the desire from companies to move away from pure subscription and seat-based models to more hybrid and usage-based approaches.”

Unsurprisingly, Metronome itself has a usage-based model.

The startup declined to reveal its valuation, saying only that “it was a very healthy multiple above” its Series A valuation. 

“We still had nearly all of our Series A in the bank and were heavily oversubscribed,” said Woody. 

The draw for AI companies

Metronome claims to “dramatically reduce” the engineering investment required by companies for billing integration and maintenance.

“We help teams launch products quickly, offer any pricing and streamline quote-to-cash workflows, all without engineering effort,” said Liu. It does that with a data platform that it says offers integrations “out-of-the-box, so engineering teams can just point their data stream directly at Metronome and skip having to own and maintain a lot of their own infrastructure.”

For enterprises in particular, Metronome claimed that transitioning to cloud and/or usage-based revenue would typically require overhauling their financial stack. Its product, Liu said, helps facilitate that transition “while plugging into their existing tooling, minimizing disruption and drastically speeding up the process.”

AI companies in particular seem to be drawn to Metronome’s offering, the company claims.

“The entire AI stack has usage-based COGS, from APIs down to the GPU infrastructure layer, which means that AI businesses often turn to usage-based pricing to keep their margins consistent,” said Woody. “We’ve had a huge amount of inbound interest from companies looking to monetize new AI products.”

Growing headcount

To help meet that demand, over the last year, Metronome doubled its headcount to 66 full-time employees, growing its staff by more than 40% in the last quarter alone. It claims to “still have a lot of hiring to do this year,” particularly across its R&D and customer-facing teams.

The company also plans to use its new funding to advance on its product roadmap.

“This capital also gives us a tremendous amount of dry powder and runway, which is important in an uncertain environment like this,” said Liu. “We’re building critical infrastructure, so customers need to know that we’ll be around for the long haul.”

As part of the funding round, NEA partner Hilarie Koplow-McAdams has joined Metronome’s board of directors. 

Billing is often under resourced internally and seen as a bottleneck for product launches and pricing changes. In reality, it’s a make-or-break revenue driver for any business,” she said in a written statement. “Metronome makes it possible for companies to operationalize new business models quickly. Every customer we spoke to shared how Metronome turned billing from a ‘hair-on-fire’ problem to a system that just works.” 

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