Numbers add up to success for Ottawa’s Member365

Management app aimed at membership-based organizations lands $1.3M in seed funding
Member365
Member365 co-founders Michael and Stephen Foley. (Photo by Mark Holleron)

With encouraging growth and a timely batch of fresh equity, Ottawa membership management startup Member365 is charting a path to becoming a “world-class” player in its market.

After running professional services tech firm Pixelera for 20 years, brothers Stephen and Michael Foley began work on the new spinoff company about four years ago. The two longtime entrepreneurs had gotten all sorts of requests over the years to build one-off database apps, and as they gained more knowledge and expertise in their industry they saw the potential in building a complete solution to the many different needs of member-based organizations.

“What we saw was they were trying to manage their membership using a combination of tools, which led to a lot of inefficiencies,” says Stephen Foley, the firm’s chief executive officer.

In 12 months, Member365 has gone from 10 customers to 140 customers in seven countries, and the firm reports consistent month-over-month growth of about 10 per cent. Now, the company is readying to leave Kanata’s L-Spark accelerator armed with a $1.3-million seed round it raised this month.

Member365’s software combines multiple services – member management, event management, customer relationship management, email marketing, hosting, reporting and financial management – into a single app. The company estimates its solution comes at roughly a quarter of the cost of using each of those services from different providers. If a potential client is using a collection of those third-party tools – or nothing at all – it’s an easy sell, Mr. Foley says.

“The biggest competitor of ours is the status quo. It’s the spreadsheet,” he says. “So we love having these conversations, because we can add value right away.”

If a prospective client is using a custom-made solution or a competitor’s larger, legacy-type enterprise system, “it’s a different discussion,” he adds. “They have a lot more questions before they make that leap.”

The biggest player in the space is the publicly traded Blackbaud; Mr. Foley says Member365 has already poached a number of that company’s clients.

“It’s all in one place, it’s a next-generation product, it feels like it’s been created for today,” he says, explaining why Member365 is attractive to organizations. “Usually there’s a gap, something that’s missing, or they’re simply paying way too much for something that’s now quite affordable.”

In its early stages, Member365 is focused on the non-profit sector, particularly professional and trade associations and business networking and innovation organizations. (The startup has more than half of Ottawa’s local BIAs signed up with its platform.) The company is also “aggressively” pursuing opportunities with chambers of commerce – one of its current clients is the Ottawa Chamber of Commerce. Mr. Foley says the idea is to gain considerable market share in those subsectors and use that dominance to power the firm to a larger and broader customer base.

 

“As a bootstrapped company up to this point, we’ve really focused on development. But with this funding, we’re able to invest more in customer success.”

Mr. Foley says the company’s $1.3 million in seed financing – which comes from investors that are also Member365 customers – will help with investment in customer success, as the firm looks ahead to not only growing its customer base but generating good retention for the long-term.

“We want them to choose our software for many, many years ahead,” he says. “These customers are really sticky. Once they come into the fold, they’re not likely to leave, especially if we keep updating our product. As a bootstrapped company up to this point, we’ve really focused on development. But with this funding, we’re able to invest more in customer success.”

Some of the firm’s other goals include generating more employment in Ottawa (the firm started with eight employees and now has 21 on the payroll) and maintaining a trajectory that could lead to a series-A financing round, most likely in the fourth quarter of 2018.

“We want to be a world-class membership management software provider,” says Mr. Foley.