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AppDynamics picks up $120M in the race to replace old-school monitoring tools

Above: Jyoti Bansal, founder and chief executive of AppDynamics, at company headquarters in San Francisco.

Image Credit: Jordan Novet/VentureBeat

AppDynamics, a company with software for tracking the performance of applications, can keep spending money on product development and sales amid a competitive market, thanks to $120 million in fresh financing.

The company today announced the new money, which includes $70 million in growth funding and $50 million in debt funding. That way, AppDynamics can hold off on an initial public offering, as stock traders still lack the enthusiasm they had for cloud computing stocks just a few months ago.

But AppDynamics has been growing and rolling out new features for mobile monitoring and business analytics, which could give it a bigger market to go after. Combine that with a focus on serving enterprises with complex applications, and you get good circumstances for a company like AppDynamics to raise money.

“In our case, the investor interest was very, very high, AppDynamics co-founder and chief executive Jyoti Bansal told VentureBeat in an interview. “We were oversubscribed but able to pick out investors that we liked from a group of investors who were interested.”

The announcement comes after a report last month that AppDynamics had taken on mezzanine capital and a revolving credit line. Now the exact dollar figures are out in the open.

AppDynamics could certainly use the money. It contends with application-monitoring and IT operations software vendors like BMC, Compuware, HP, and IBM, and Bansal’s previous employer, CA. At the same time, younger vendors also eye the application-monitoring market. Well funded New Relic leads the pack there. Recently, startup Chronon Systems recalibrated its DripStat Java virtual machine monitoring software and started marketing it as APM. Meanwhile others, like AppNeta and mobile focused-Crittercism keep ticking along.

An AppDynamics spokesman declined to provide timing for the company’s public bid. But it’s clear that move is on Bansal’s brain. He couched the new round as “pre-IPO growth financing” but did not elaborate.

To date AppDynamics has raised $206.5 million, Bansal said. That number includes a $50 million round announced in January 2013 and an $11 million round from 2010.

New investors Battery Ventures, ClearBridge Investments, and Sands Capital participated in the new round, along with previous investors Greylock Partners, Institutional Venture Partners, Kleiner Perkins Caufield & Byers, and Lightspeed Venture Partners. The debt facility comes from Silicon Valley Bank.

Part of the new money will help AppDynamics add to its international presence, particularly in Asia Pacific and Latin America. The company also wants to launch its business-analytics tool for public consumption.

AppDynamics started in 2008 and is based in San Francisco. It employs 450 now and plans to increase that number to around 600 in the coming year. The company claims to have 1,300 customers, including Citrix, Expedia, Garmin, Surescripts, and T-Systems.

Last year CA sued AppDynamics on patent-infringement allegations. Yesterday CA added to its claims by saying Bansal and fellow AppDynamics co-founder Bhaskar Sunkara first began working on AppDynamics while they still worked at CA. Bansal didn’t think much of the new attacks, describing them as CA’s latest legal slaps against its competition.

“I wish that we would not be spending money on legal fees and lawsuits,” he said. “But unfortunately CA has come down to not innovating and competing. … We’ll fight it in the courts and we’re very confident we’ll beat CA there.”

More information:

AppDynamics is the leading provider of Software-as-Service (SaaS) and on-premise application performance management for modern application architectures in both the cloud and the data center. The company delivers solutions for highly d... read more »

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