VentureBeat

Before the recent financial crash, we wrote about growing investment around the programming framework Ruby on Rails. It looks those investments haven’t stopped yet – New Relic, a company that helps you manage Rails applications, has raised $6 million in a second round of funding.

Dan Scholnick of Trinity Ventures, which led the round, says there are a bunch of reasons why New Relic seemed like a good investment, even as the economy crumbles. For one thing, interest in Rails (which gives developers speed and flexibility when building apps) continues to grow. The framework is even being used by big, established companies, Scholnick says. And New Relic’s team makes it particularly well-suited to take advantage of this trend — in Scholnick’s words, it’s like someone called “central casting” to build this kind of company. Most significantly, founder Lewis Cirne previously led Wily Technology, which managed Java apps, back in 1998, taking it through the dot-com bust to annual revenues of $100 million when it was acquired by CA two years ago.

New Relic’s product is a plugin called RPM that provides developers with diagnostic tools to help them find and fix problems with their code. The San Francisco company has been growing pretty quickly — since launching in May, it has added an average of 170 new customers per month, for a total of 850. Those customers include photo service Getty Images, faux-punk rock retailer Hot Topic and 37Signals, whose online business and collaboration tools are used by VentureBeat. In addition to those paying customers, 1,400 users have signed up for New Relic’s free service, RPM Lite.

This funding comes only six months after New Relic announced its $3.5 million first round, but Cirne says the company wasn’t running out of cash. Instead, the new venture dollars will help New Relic take advantage of new product opportunities at “the higher end” of the Rails management market. Benchmark Capital, which led New Relic’s first round, also participated in this funding.

New Relic, a startup that helps you manage applications built with the Ruby on Rails framework, has raised $3.5 million in a first round of funding.

Both Ruby on Rails and computing in the Internet “cloud” have been heating up recently. In fact, this is just the latest in a series of investments in this field from Benchmark Capital, one of Silicon Valley’s leading venture firms. (Benchmark invested in Engine Yard back in January, and announced it was backing RightScale just last week.)

That’s no accident, says Benchmark general partner Peter Fenton, who’s joining New Relic’s board. Fenton describes cloud computing and Ruby on Rails as the two most important and transformative recent developments in software. The movement to the cloud is changing how software is distributed and what it can do, while Ruby on Rails is making it faster and easier for developers to build applications.

New Relic’s founder Lewis Cirne already has some experience with application performance management — in 1998, he founded Wily Technology, a company that provided a similar service for Java apps. Wily eventually grew to $100 million in annual revenue and was acquired by CA, Inc. in 2006.

Menlo Park, Calif.-based New Relic’s offering works as a Rails plugin and is supposed to provide an easy interface for developers to detect, diagnose and fix problems with their apps (see screenshot below). It’s still in private testing mode; Cirne says the company has already signed up 50 customers. (Since it’s still in testing, they’re not paying any fees yet.) The service should become available to the general public in 60 days or so.

Fenton and Cirne both say that New Relic complements Benchmark’s past investments, particularly Ruby on Rails company Engine Yard — Engine Yard helps with hosting and deployment, while New Relic finds problems in the application code itself.

There’s a personal connection behind the deal, too. Not only was Cirne an entrepreneur in residence at Benchmark, but his previous company Wily was actually Fenton’s very first investment as a brand new, 27-year-old venture capitalist.