Lago raised $22M across two funding rounds, most recently closing a $15M Series A in March 2024 led by FirstMark at an estimated $100M valuation. The Series A followed a $7M seed round led by SignalFire.

Key investors include Y Combinator, New Wave, Addition, and Script, along with angels from the developer tools and AI ecosystem.

Lago functions as programmable billing infrastructure that transforms raw usage events into invoices and payments. Developers send events like API calls, tokens consumed, or compute seconds to Lago's API, and the platform automatically aggregates them into billable metrics using COUNT, SUM, or custom SQL expressions.

The core workflow starts with event ingestion, where companies can POST individual events or batch up to 100 events per call. Lago stores these in real-time using a dual-database architecture with Postgres for transactional data and ClickHouse for high-volume event streams.

Users configure billing through either a web interface or API, defining billable metrics and bundling them into plans that can combine flat subscriptions, per-unit usage, prepaid credits, and one-off charges. The platform handles complex pricing models like tiered, volume-based, and hybrid structures within the same customer contract.

Lago runs the billing clock across different timezones, generates PDF invoices, and orchestrates payments through integrations with Stripe, GoCardless, and Adyen. The system includes revenue analytics dashboards showing gross revenue, MRR, and accounts receivable aging, with data accessible via API for custom reporting.

The platform offers native connectors to CRM systems like Salesforce and HubSpot, ERP systems like NetSuite and Xero, and tax engines like Anrok and Avalara. Companies can deploy Lago as a self-hosted solution, use Lago Cloud, or run it in their own VPC.

Lago uses an open-source model with commercial licenses for premium features. The core platform is available under the AGPL-v3 license, allowing companies to self-host and modify the software without revenue sharing.

The go-to-market targets B2B companies with a developer-first strategy, using GitHub distribution and technical documentation to reach engineering teams. The open-source model creates a funnel in which companies start with the free version and upgrade to paid tiers as they need advanced features like dunning management, multi-entity billing, or enhanced analytics.

Revenue comes from commercial licenses rather than transaction fees, unlike payment-centric competitors that take a percentage of processed volume. This pricing structure provides predictable costs for high-volume businesses as they scale.

Open-source community contributions to development and integrations expand the ecosystem. Companies that start with self-hosted deployments often migrate to Lago Cloud for managed infrastructure, creating expansion revenue opportunities.

Lago's cost structure centers on cloud infrastructure for the managed service and R&D for platform development. The company operates with around 80-90 employees while serving hundreds of production customers.

Stripe dominates this category through vertical integration of billing with payment processing. Stripe's acquisition of Metronome for $1B demonstrates the strategic value of controlling the entire billing stack for AI companies that process billions of usage events.

Stripe Billing offers deep integration with Stripe's payment network and global infrastructure, but limits customization and creates vendor lock-in. The platform caps event ingestion at roughly 10,000 events per second without premium tiers, constraining high-volume AI workloads.

Paddle and Adyen offer similar bundled approaches, handling merchant-of-record responsibilities and tax compliance but with less flexibility for complex usage-based models.

Chargebee, Zuora, and Recurly built their platforms for the subscription economy era, optimizing for seat-based pricing and low-volume state changes. These incumbents are retrofitting usage-based capabilities but struggle with real-time metering requirements.

Chargebee added scalable usage infrastructure supporting 200,000 events per second, but still charges percentage-based fees and lacks the real-time processing that AI companies require. Zuora remains the enterprise standard with revenue recognition modules, but is perceived as heavy and expensive for product-led growth teams.

Maxio focuses on B2B SaaS with bundled revenue recognition, handling up to 100,000 events per second, but requires manual processes for many usage ingestion workflows.

Metronome, Orb, and m3ter represent the new generation of billing platforms built specifically for consumption-based models. Metronome's $1B acquisition by Stripe validates the market but removes a key independent alternative.

Orb raised $44M and focuses on developer experience with real-time metering, while m3ter targets enterprise customers with complex pricing models. These platforms offer sophisticated usage tracking but typically charge percentage-based fees and lack open-source flexibility.

Togai and UsageBox serve similar markets with API-first approaches, but have smaller ecosystems and fewer integrations compared to Lago's open-source community.

Lago is expanding beyond billing into adjacent revenue functions like dunning management, collections, and revenue analytics. The platform recently added overdue invoice webhooks as a foundation for automated collections workflows.

The company launched dedicated revenue analytics with MRR tracking and revenue stream analysis, positioning to capture finance team budgets currently spent on business intelligence tools. Advanced analytics features could command premium pricing while increasing customer stickiness.

Integration with entitlement and feature flag systems represents another expansion vector, allowing Lago to control both billing and product access management for usage-based companies.

Lago is building e-invoicing compliance engines starting with French electronic invoice formats ahead of the September 2026 mandate. Similar adapters for Italy, Spain, Germany, and Latin America could open new markets and convert self-hosted users to paid compliance tiers.

Multi-entity billing capabilities in development would unlock larger enterprises that operate across multiple legal jurisdictions. This feature addresses a key limitation that currently drives enterprise customers to incumbents like Zuora.

Cross-border payment orchestration beyond the current Stripe and GoCardless integrations could capture payment switching fees and reduce dependence on any single payment provider.

The shift toward token-based billing in AI creates a massive addressable market as 85% of SaaS companies now use some form of usage-based pricing. Lago's event-streaming architecture directly addresses the needs of LLM platforms, vector databases, and AI gateways.

Infrastructure APIs beyond traditional SaaS represent significant expansion opportunities, with companies needing to meter compute resources, data transfer, and specialized hardware usage. Lago's ability to handle hundreds of thousands of events per second positions it well for infrastructure-scale workloads.

The platform could expand into adjacent developer tools like API management and rate limiting, leveraging its existing event processing capabilities to offer a broader infrastructure suite.

Stripe integration: Stripe's acquisition of Metronome for $1B indicates expansion into usage-based billing, directly competing with Lago's core market. Stripe can bundle billing with payment processing and global infrastructure, adding competitive pressure, as integrated bundles can lower complexity for customers.

Open source monetization: Converting open-source users to paid customers remains challenging as companies can self-host indefinitely without paying licensing fees. The business model depends on customers needing premium features or managed infrastructure, but sophisticated engineering teams may build workarounds rather than upgrade to commercial tiers.

Market consolidation: The billing infrastructure market is consolidating as larger platforms acquire specialized players, potentially reducing the number of independent alternatives. If payment processors and cloud providers continue vertical integration strategies, independent billing platforms like Lago may struggle to compete against bundled offerings for financial infrastructure.