July 22 (Bloomberg) -- AppDynamics Inc., a startup that develops software for companies to monitor applications, has become the newest member of the $1 billion-plus valuation club.
The San Francisco-based startup said today it has raised $120 million in venture capital and debt, valuing the company at more than $1 billion. Battery Ventures, ClearBridge Investments, Sands Capital Ventures and previous investors including Greylock Partners and Kleiner Perkins Caufield & Byers put in $70 million in equity, while Silicon Valley Bank provided $50 million in debt, the company said. AppDynamics, founded in 2008 by Jyoti Bansal, has garnered a total of more than $200 million in financing.
Many technology startups have boosted their valuations this year to more than $1 billion, with some companies even hitting the 11-digit valuation mark and fomenting talk of a bubble. According to researcher CB Insights, 14 U.S. technology companies entered the $1 billion valuation club in the first half of the year, more than double the number of startups that did so in all of 2013.
AppDynamics said it will use the funds to hire employees as it builds features and its sales force. The company recently opened offices in Japan, Australia, India, Singapore and Brazil, and projects it will have 550 to 600 people by the end of this year, up from 450 currently, Bansal said in an interview.
“Our goal here is building the next great software company,” Bansal said, adding that he plans to take AppDynamics public eventually. “We want to be a public, independent software company. We aren’t looking for any kind of a quick exit.”
AppDynamics is pursuing the market known as application-performance management software, which grew 13.1 percent to $2.4 billion worldwide in 2013, according to researcher Gartner Inc. The startup is competing with traditional suppliers like International Business Machines Corp. and BMC Software Inc., as well as newcomers like New Relic Inc. CA Inc. sued AppDynamics last year for patent infringement.
AppDynamics makes software that lets businesses track the performance of their apps and websites and quickly respond when a site crashes or if customers in a particular region are experiencing slow connection speeds. The startup has more than 1,300 customers, including restaurant-booking service OpenTable Inc.
Jonah Kowall, an analyst at Gartner, said startups such as AppDynamics generally provide cheaper software that is easier to deploy than that from incumbents.
“AppDynamics has an enormous opportunity to help companies identify, monitor, analyze, and optimize performance issues where hundreds of billions of dollars are at stake,” Matt Murphy, a partner at Kleiner, wrote in an e-mail.
AppDynamics’s sales more than doubled for the year ended in January, and the company ended that period on pace for more than $100 million in bookings, Bansal said, declining to be specific on the startup’s total revenue. The company, which is unprofitable, has doubled its customer base annually for the past three years, AppDynamics said.
To contact the reporter on this story: Olga Kharif in Portland at email@example.com