14 DAY TRIAL // The recently created high-profile venture capital fund Andreeseen Horowitz isn't wasting any time and has already closed the first investment deal with Seattle-based enterprise software startup Apptio. The latter got $14 million in funding in its second round, which it plans to use to spur solid growth in the coming years.
Apptio builds custom software aimed at helping CIOs at big companies handle the business part of their job, managing IT costs. So far, the startup has signed 36 large corporations in almost two years but plans to expand at an increased rate. These companies pay Apptio between $50,000 and $1 million for its services and the startup boasts exceeding customer and revenue targets five fold.
Of the 36 companies, around 20 have IT budgets exceeding $100 million so the potential savings benefits mostly outweigh the costs. Sunny Gupta, the company's founder and CEO, believes Apptio is looking at a $1 billion market, which is mostly untapped so far.
Apptio currently employs 40 people but plans to hire 10 or 20 more by the year's end. Gupta says the company could be profitable today but he is focusing on growth hoping it will bring in around $100 million in sales and employ 500 to 700 in four or five years, at which point it will also be ready for a potential IPO.
Gupta has a very good track record, his latest venture, iConclude, having been sold to Opsware for $70 million. Opsware was cofounded and owned at the time by Marc Andreessen and Ben Horowitz and was later sold to HP for a cool $700 million. Gupta went on to work for Andreeseen and Horowitz for a while and both invested in the first round in Apptio as angel investors. This set the stage for this latest investment in which the newly founded $300 million fund, along with other investment companies like Shasta Ventures, Greylock Partners, Madrona Venture Group, pledged $14 million.