Xactly talks about on-demand apps and getting $15 million from VCs

Xactly snagged a cool $15 million from VC investors, which include Alloy Ventures, Bay Partners, Rembrandt Ventures, and others. The company develops on-demand software to help companies manage the performance of their sales forces. As seen with other companies like salesforce.com, inc. (NYSE: CRM) and NetSuite, the on-demand approach is gaining lots of momentum. A report from Triple Tree estimates that the market to grow from $2.3 billion in 2003 to $7.2 billion by 2008.

I had a chance to talk to Xactly's CEO and founder, Chris Cabrera. He said that the financing round was "lighting fast" and took only 45 days to close. He got five terms sheets.

"When we started the company two years ago," said Cabrera, "we thought our customer base would be mostly small and medium size businesses. But we quickly realized that big companies want on-demand solutions."

As a sign, the average Xactly implementation has 175 users.

So is venture funding getting frothy again?

Not necessarily. According to Cabrera: "There are a lot of companies that are calling themselves on-demand players and it makes it tough for VCs to get through the clutter. But if your company has a solid on-demand platform and customer momentum, the capital will be there. Lots of capital."

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.