Zend Technologies, provider of open-source tools companies need to develop, deploy, and manage enterprise PHP applications, has raised $9 million in a new round of venture funding from its flock of existing investors. This brings its total to $55 million, a generous amount for an IT company.
PHP, which initially stood for “personal home page,” is a relatively simple scripting language that you can embed directly into HTML documents, used primarily to develop web pages.
Based in Cupertino, Calif., Zend says it will funnel the money into further product development, and efforts to broaden its market. It also says that as cloud computing gains momentum, more and more corporate IT departments are relying on PHP to churn out apps custom-tailored to fit their needs — already upwards of 30,000 companies and a third of web sites depend on the language. Zend, started by the actual founders of PHP, wants to remain at the front of this wave.
“The big change came about three or four years ago when the market landscape changed with cloud adoption and the use of PHP for enterprise, giving us a significant monetization opportunity,” says Zend CEO Andi Gutmans. “There has been movement away from enterprise Java to PHP and more lightweight technologies.”
Just last year, the company brought 4,000 new customers into its fold, and established footholds in the U.K., the Netherlands and India. It says a lot of this growth was driven by demand for its Zend Server product, which hosts PHP web applications, and reduces the amount of time and money customer enterprises need to spend on app creation and tracking.
This sounds all well and good, but, as InternetNews also asks, why does a seemingly capital-efficient IT company need to keep adding on so much venture funding? Why isn’t it operating on its own cash flow after a decade of existence? One hypothesis is that demand is increasing so steeply that it needs help catching up. The other is that it’s needed to fend off potential acquisitions on the way to an IPO. The same article says it might be a smart buy for an IBM or Oracle, which it already counts among its partners.
But Gutmans says that the momentum picked up in the last several years has broadened Zend’s business model, resulting in the need for more capital.
“It’s taken a while for open-source to become a first-class citizen within the enterprise world,” he says. “Now that has changed significantly, and the recession has actually accelerated the shift because companies are looking for lower cost solutions and to make bigger changes. So solutions like ours are becoming more appealing.”
In the meantime, the company’s rapid growth is clear. At the start of May, it rolled out a new version of its Zend Studio tool for PHP application development, supposedly making it easier for app creators to identify and fix bugs. This should save customers time and money, especially those that do not have access to their own production servers. Looking ahead, Gutmans says the company will launch a “more expansive, higher-end” product intended to complement the Zend Server and support large enterprise growth.
Zend’s recent round of funding was led by existing backer Greylock Partners, joined by Azure Capital Partners, Index Ventures, Intel Capital, SAP Ventures and Walden International. In the past, it has also taken capital from Platinum Neurone Ventures and TriplePoint Capital.
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