AppDirect, a San Francisco-based startup, has raised $US140 million in a round led by a fund advised by JP Morgan Chase.
That round values the company at $US1 billion, as it furthers its master plan to be the middleman of choice in the exploding cloud software business.
This big round comes only seven months after AppDirect raised $US50 million earlier this year, in a deal led by Mithril Capital Partners. That investment valued the company at $US600 million.
And the reason for that ballooning valuation is simple, says AppDirect co-CEO Daniel Saks, who co-founded the company back in 2009.
“Everybody wants to make money in the cloud, and everybody wants to be productive,” Saks says.
The AppDirect business is rooted in acting as kind of an App Store for the enterprise software buyer. Businesses are turning to the cloud, where software and services are delivered over the Internet via the browser or mobile device, to reap cost savings and enable their workers to be more product anywhere.
When a company goes to buy a cloud-based business tool — like the kind sold by companies like Box, Salesforce, or even Microsoft — they might turn to a third-party implementation partner, almost like a contractor for enterprise IT infrastructure.
And that partner will be using AppDirect to resell a cagalogue of pre-vetted cloud services at a markup, or so AppDirect hopes. The customer probably won’t even know they’re using AppDirect.
“We’re pretty under the radar,” Saks says.
Much like Apple’s App Store, an AppDirect listing can extend a company’s reach well beyond what Saks describes as the Silicon Valley brand of early adopters.
People in tech-savvy industries and urban centres, like San Francisco or New York, are quick to be the first to adopt new tools like Slack or Zenefits. But elsewhere, lots of customers depend on their relationships with those third-party implementation partners to advise them on which software to buy, and when.
“They have been having a really hard time embracing the cloud,” Saks says.
With AppDirect empowering those partners, “[customers] have any business software at their fingertips,” he says. Those resellers have access to a wider range of product, those developers get more customers, and AppDirect takes its cut of the sales price.
The next stage is to grow this out globally, with AppDirect investing in enhanced presences in Europe and Asia. Plus, because AppDirect works with all of these different software product, it’s in a unique place, technologically speaking. So the next stage for AppDirect is to further its efforts to act as a bridge between those apps, letting developers share data among them.
And no, AppDirect isn’t profitable, but Saks says that’s because the company is looking to build on its already one-million-strong subscriber base. And it has the capital right now to last the long haul while it focuses on growing its top-line.
Foundry Group, iNovia Capital, Mithril Capital Management, StarVest Partners, and Stingray Digital all participated in this round. To date, AppDirect has raised $US245 million.