Bootstrapped for 8 years, Xensam has now snapped up $40M for AI that manages software assets

Software asset management — an area of enterprise IT designed, in part, to help businesses save money — continues to draw a lot of money itself. In the latest development, Xensam — a startup out of Stockholm that provides AI-based tools to help businesses understand and track where and how software is being used — has raised $40 million, its first outside funding since being founded eight years ago.

The funding is coming from a single investor, Expedition Growth Capital out of London. Oskar Fösker, Xensam’s CEO who co-founded the company with his brother Gustav (the CTO), said it will be used to continue developing its AI technology stack, to hire more people (it’s now at 100 employees) and to break into the U.S. market.

The valuation is not being disclosed, but Fösker said he and his brother remain majority shareholders. The company itself has 200 customers — one of the bigger names including Volvo’s Polestar and Northvolt — and annual recurring revenues are growing at 126% annually, but it’s also not disclosing actual revenue numbers.

The world of software access management, which others in the space sometimes call software expense management or license management, is a crowded one, not least because the problem getting tackled is a big one, and it’s being tackled for multiple reasons.

Nearly $900 billion was spent globally by organizations on enterprise software in 2023, and some in the field have estimated that, thanks to the explosion in cloud computing and software sold as a service, a larger organization can have hundreds or even thousands of different licenses under its roof.

That can have implications across disparate areas like business spend, productivity and security for that organization, so it’s no surprise that we’ve seen a rush of startups and larger tech businesses rushing to address the challenge of trying to track and understand the bigger picture of what is being used, where, and why.

Xensam itself got its start out of that competitive fray. The two founders previously worked at another company called Snow Software, a big name in this space, which was scaling fast but losing pace, in their opinion, when it came to cutting edge developments, such as the use of AI to better track SaaS usage.

“After a while it was clear that a hole was about to open up in the market, and no one showed any intentions to fill it,” Oskar said. “This hole was to be the first, native SaaS player in the business.” Sidenote to Snow that speaks to potential valuations in this space: one of Snow’s biggest competitors was a company called Flexera, and last year Flexera acquired Snow after it was reported that Snow was looking to sell itself for around $1 billion. Flexera meanwhile was last valued at nearly $3 billion in 2020. Other big deals in this area have included IBM buying Apptio for nearly $4.7 billion.

Xensam’s approach is to use AI to comprehensively scan and understand what is going on across an organization’s network, giving a real time picture of thousands of applications that might be in use across both cloud and on-premise environments.

“We’re using AI for various parts of the technology,” Fösker said. “We’re using it to handle extreme amounts of data in the software normalization process,” which he describes as the process where raw data gets normalized into standardized applications that is populated with meta data. “This is the key reason why we’ve been able to completely beat the competition.” He said that it’s also using AI in the front end with a chatbot trained on its system and software licensing rules “can interact directly with the system and provide everything from information from the system to prebuild reports based on an open specification.”

He doesn’t go into detail around what, exactly, it plans to launch next, or where it believes there remain holes in the market, but said that it plans to launch more products in Q2.

Their experience at Snow is also why the company bootstrapped its business up to now. “We don’t believe that a financial structure based on a Series A, B, C etc. for survival is a sound business model. It is based on too many external factors,” he said. “We knew we would have to be financially stable… to be sustainable.”

The turn to eventually taking VC money, he said, was because they had figured out the business model on their own already.

“We’ve seen many businesses raising money and losing a beautiful company culture while all focus is being changed to growth,” he said. “Therefore, it was very important for us to find an investor that also shared our cultural values, which we believe we have in Expedition.”

For its part, Expedition describes itself as typically the first outside investor in startups — meaning it works with a lot of bootstrapped founders so understands that model perhaps better than some others.

“Xensam is one of the most impressive European growth businesses we’ve come across,” Oliver Thomas, founder and managing partner at Expedition Growth Capital, said in a statement. “In the nearly eight years they have been operating, they have built a critical solution which is enabling businesses with thousands of employees to track, monitor and manage software usage. We’re delighted to be working closely with the company as their first external investor and look forward to being a part of their growth journey.”