Apptio Nabs $16.5M Series C, While Series A and B Funds Collect Interest in the Bank

Entrepreneurs looking for tips on how to rake in venture capital might want to talk to Apptio‘s co-founder and CEO Sunny Gupta. Although the Bellevue, WA-based software startup still has money in the bank from its $7 million Series A in 2007, the company said today that it has raised another $16.5 million in Series C financing led by continuing investor Shasta Ventures. Current investors Andreessen Horowitz Fund, Greylock Partners, and Seattle-based Madrona Venture Group also participated in the round.

Founded in 2006, Apptio develops technology business management software, specifically for IT financial management. The software, designed to help businesses manage the cost, quality, and value of its IT services, provides information on the total cost of IT services through an interactive “Bill of IT,” and combines elements of planning, budgeting, and forecasting of IT services directly into the system.

Since its Series A, the company has practically had to fend off further investment. Apptio raised a $14 million Series B in August 2009, which it planned to use to “crush the competition,” as Gupta told Xconomy last summer. And today’s financing news comes on the heels of “a tremendous amount of growth” over the last year, according to Gupta—a doubling in its clientele to more than 50 customers, and a 300 percent growth in bookings. Though the company was by no means in need of more financial support, Gupta says venture firms were approaching him about investing.

“We have a very strong cash position,” he says. “So while we didn’t really need the money, we got a very strong inbound request from the VC community to take on the money. This is a really strong market opportunity, and by taking the additional capital, we can expand our business beyond.”

The latest round of funding will be used to expand Apptio’s reach over the next 12 months—increasing sales and marketing throughout North America and Europe to help build out to new markets, and launching a number of new products and capabilities, all aimed to “help CIOs [chief information officers] manage their business better,” Gupta says.

“Today we are really focused in the U.K., and Europe is a pretty big territory to cover,” he says. “And then in 18 to 24 months we certainly look at targeting Asia-Pacific as another geography from an expansion perspective.”

As for the company’s products, Gupta says Apptio will continue to focus on the business IT management market, and plans to roll out new planning and processing applications in the near future that give CIOs better control over the planning of IT decisions, budgeting, and forecasting.

A year ago Apptio had 45 employees. Now the company employs 85 full time staffers, and Gupta says he expects to add another 30 across the board—from development and engineering, to sales and marketing—over the next few months. “We will be at 115 by the end of year. We are just seeing phenomenal growth,” he says. “We may grow even faster—but it depends on how fast we can hire.”

Despite the fact that Apptio’s VC rounds continue to increase, Gupta says he doesn’t see the company pursuing any more outside investments in the near future.

“We believe that this money is all the money we should need to really substantially grow the business at a faster rate. So for now we’re not really anticipating future rounds,” he says. “We think we are extremely well capitalized at this stage to really take advantage of these market opportunities. We just wanted to have enough capital to really expand our business at a rapid rate. Even if we don’t dip into this money at all, we wanted to have this money at our disposal. We think that this should be the last round from a financing perspective, but never say never.” And though Gupta did not mention any plans to pursue a public offering, Seattle Times reporter Brier Dudley suggests that this latest round could position the company for an IPO.

Gupta also didn’t seem too concerned about Apptio’s competition. While he admits “the market is heating up,” he believes the company has an advantage compared to others out there, not surprisingly. And while more companies are jumping into IT management, Gupta says, “Ninety percent of our deals still don’t have any competition.” The reasoning? Gupta says Apptio is unique in the way that it integrates deeply with financial and operational IT data.

And while a couple of big companies, like BMC Software and Hewlett-Packard, are starting to offer some services in the IT business management space, Gupta says, “it’s like an apples and oranges comparison”—and one that’s also helping to get the word out for Apptio.

“That’s actually helping us because they’re educating the market that this is a need,” he says. “But we’re light-years ahead—the big guys aren’t really innovators, they manage existing markets.”

Some of the big-name brands currently on Apptio’s client list include Alaska Airlines, Blue Cross Blue Shield, BNP Paribas, Cisco, EMD Chemical, Expedia, Hallmark, JPMorgan Chase, Saint Luke’s Health System, Starbucks, and Volkswagen Credit. And Gupta sees an opportunity to reach countless more markets, both small and large.

“We believe every CIO, whether you’re a big company or a small company, is really going to need a system like Apptio to manage the business of costs,” Gupta says. “We are sitting on a multi-billion market opportunity.”

Thea Chard is a correspondent for Xconomy Seattle. You can e-mail her at or follow her on Twitter at Follow @

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