SignalFx Raises $20M, Launches Monitoring Tool for Web-Based Apps

Startup SignalFx today emerged from two years in stealth mode to unveil a troubleshooting tool it designed for Web-based software developers and for other businesses that conduct operations on widely distributed computers and devices.

The San Mateo, CA-based company also announced the completion of a $20 million Series B fundraising round led by Charles River Ventures and joined by Andreessen Horowitz, which spearheaded SignalFx’s $8.5 million Series A round in 2013.

SignalFx was founded in 2013 to update one of the traditional information technology chores for businesses—monitoring the health of company computers and the software used on them. In traditional companies that run software installed on their own machines, IT managers check for breakdowns in individual computers and for program malfunctions. They’re aided by monitoring software from companies such as IBM and Hewlett Packard, SignalFx co-founder and CEO Karthik Rau says.

But Rau says new monitoring tools are needed for cloud app developers who sell their programs to businesses on a subscription basis, and who therefore take on the responsibility to keep those programs running smoothly on thousands of customers’ computers. Monitoring all those computers could lead to thousands of problem alerts on traditional operations monitoring systems, without necessarily identifying anything wrong with the developer’s app, he says.

Rather than doing status checks on individual components such as computers, the SignalFx monitoring system analyzes aggregate data to find patterns that identify actual app malfunctions or other operational problems, Rau (pictured above) says.

Cloud-based apps are updated regularly for customers as part of a SaaS (software as a service) subscription.

“All these cloud applications are living, breathing organisms that change frequently,” Rau says.

Program failures may occur at times during upgrades. For example, a developer may create changes in two separate areas and discover that the new versions inadvertently interfere with each other, Rau says.

When developers flag a problem and then insert computer code they hope will fix it, they keep their SignalFx dashboards open to see if the solution works, Rau says.

“They’re getting that visibility in real time,” Rau says. If the new code fails, or even makes the malfunction worse, the developer can quickly roll it back before it causes problems for customers, he says. The SignalFx product has been in beta testing for about six months, and will now be generally available as a Web-based subscription service, Rau says.

Rau co-founded SignalFx with chief technology officer Phillip Liu. Ben Horowitz, co-founder and partner at Andreessen Horowitz, is a member of the SignalFx board with Rau and Liu.

“Having built a few traditional systems management products, it is quite obvious to me that none of the important, existing products work properly for cloud architectures,” Horowitz said in a statement announcing the Series B round. “Naturally, when I had a chance to fund two great entrepreneurs in Phil and Karthik, who not only understood the problem but built the definitive solution, I did not hesitate to invest.”

Devdutt Yellurkar, a general partner at Charles River Ventures, is now joining the SignalFx board.

“The move towards SaaS and cloud business models has introduced a major disruption in the world of downstream operations management products, with the monitoring category at the center of this disruption,” said Yellurkar in the statement. “SignalFx is truly changing the game for monitoring modern applications with its breakthroughs in streaming analytics technology.

During its stealth period, SignalFx attracted paying customers, Rau says. They include large public companies Rau says he can’t yet name, as well as smaller companies such as the online furniture retailer Chairish. SignalFx is not disclosing its revenues.

SignalFx plans to use its new influx of capital to expand its sales and marketing team and to speed up its research on monitoring tools for cloud software companies. Rau says SignalFx monitoring could also be useful to other companies that use programs on multiple computers, such as financial services companies conducting stock trades.

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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