AppDirect rings the cash register -- $140 million funding

If anyone didn't realize application marketplaces are a huge thing, AppDirect's monster funding round will soon clarify the situation for them.

AppDirect has a pretty simple proposition. The way they see it, more and more organizations are going to have to work out how they can deliver some kind of application marketplace. Telcos, cloud vendors, banks and other organizations increasingly look to package up a range of different applications, and sell them to their existing (and future) customer base in order to generate more revenue and leverage the existing customers they have.

But if the proposition is simple, actually executing it is very hard. The sorts of organizations that have the biggest need for these sorts of marketplaces are often the ones with the most complex and inflexible IT systems. What this means is that actually executing the mechanics of a marketplace is incredibly difficult. Add to that the fact that the billing and subscription systems these companies often use are locked down and impenetrable and you have a conundrum -- delivering that world of applications to customers is highly attractive but is often out of reach to the very organizations that need it.

Which is where AppDirect comes in. The company is a cloud marketplace vendor. They bring together providers, developers and consumers of cloud services into an ecosystem and offer them a platform where all the transacting, fulfillment and management can take place. AppDirect takes care of the marketplace, billing and distribution and reselling for massive global companies such as Telstra, ADP, Samsung and Deutsche Telekom. You'd never know it since these companies obviously label their marketplaces as their own. But deep down, it's AppDirect that is powering the mechanics.

This is not only a massive opportunity, but it is an incredibly sticky one. When a large company makes a decision about what to use for its application marketplace, it tends to stick with that decision for a long time -- rip and replace is a very unattractive proposition for enterprises. AppDirect, therefore, may have a long and complex sales cycle, but when it gets a sale, that revenue is incredibly sticky.

And that stickiness is highly attractive to investors, which is why AppDirect is today announcing a massive $140 million investment round. The Series E funding, which takes total funding to date to $245 million, was led by J.P. Morgan with participation from existing investors including Foundry Group, iNovia Capital, Mithril Capital Management, StarVest Partners, and Stingray Digital. AppDirect has only been going for six years but has managed to get itself into a very strong position.

In terms of metrics, while AppDitrect doesn't share revenue, it does boast of having over one million paid business subscribers, a 300 percent increase year over year. It also has a global team -- 350 employees work for the company spread across San Francisco, Sydney, Munich, Montreal, Ottawa, Boulder, London, Paris, Stockholm, Singapore and Tokyo. Finally, AppDirect has customers in over 25 countries.

“When we started the business in a San Francisco apartment more than five years ago, Nicolas Desmarais and I had the vision of helping businesses find, buy, and manage the technology they need to thrive,” said AppDirect president and Co-CEO Daniel Saks. “This new round of funding validates our vision and traction in the market, and will allow us to put cloud services in the hands of millions more businesses through local, trusted providers. We look forward to helping even more companies of all sizes and stages of growth sell and manage their own SaaS applications.”

An impressive funding round, and impressive performance to date from AppDirect.

Copyright © 2015 IDG Communications, Inc.

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