AppDirect raises mammoth $140 million round


San Francisco-based AppDirect has raised $140 million in funding from J.P. Morgan along with the company’s existing investors, including Foundry Group, iNovia Capital, Mithril Capital Management, StarVest Partners, and Stingray Digital.

Led by cofounders Daniel Saks, of St. Catherines, Ontario, and Nicolas Desmarais of Montreal, Quebec, AppDirect has now raised $245 million since it was founded in 2009.

“We founded this with the simple vision of helping businesses find, buy and use the cloud services they need,” Saks, 30, told MTLinTech. “What’s so exciting is that over the last five years we’ve gone on to power the majority of transactions through this channel and we think this round symbolizes the belief that we’re truly reinventing the way businesses work.”

The company has grown significantly over the past year, now powering the largest network of cloud service marketplaces. It claims it’s technology is being used by around a quarter of all small businesses worldwide through partners such as Comcast, Deutsche Telekom, Telstra, ADP, and FICO.

AppDirect said in an email that it’s at a point where “we have so many different capabilities in our core platform that we can help pretty much any business, not just the Fortune 500 anymore, sell and manage cloud services.” Indeed, now it has over one million paid business subscribers, “a nearly 300 percent increase year over year.”

Finally, it’s doubled its headcount to more than 350 employees in San Francisco, Sydney, Munich, Montreal, Ottawa, Boulder, London, Paris, Stockholm, Singapore, and Tokyo. With a global team, Saks said AppDirect is undoubtedly focusing on growing its customer base around the world. Currently AppDirect works in 25 countries, and is expanding in Europe and Asia.

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Inside AppDirect’s Montreal offices

Saks said the company decided to raise the new funding to make cloud software accessible for all markets. It’s no longer about business services (like, for example, Freshbooks, Mailchimp or Dropbox) – services that heavily rely on the cloud – trying to get to their first million customers. These companies that AppDirect works with have already done that.

“We realized that for those services to be brought to the masses, like people in rural places like, say, Magog, or somewhere in Arkansas or even Myanmar, it requires local trusted providers, brands like the telecoms or systems integrators that bring these services globally while making them relevant locally,” said Saks.

On the funding the company also wrote that it wants to innovate on its core platform, which consists of catalog management, identity management, subscription billing and data management, to help businesses increase productivity and drive IT efficiency. AppDirect will continue to invest in things that allow businesses to manage multiple applications and services.

It’s recent acquisition of Calgary-based AppCarousel – AppDirect’s fourth – is going to help in that regard. AppCarousel is a platform that will allow AppDirect to help businesses access applications across all devices.

“What we’ve seen is a longterm trend where its not always about accessing services from the web or your phone,” Saks told us. “It’s about being from any device.”

Connected devices, he said, will all assist in seamlessly transforming out lives, like watches, cars, showers, fridges or virtually anything, really. “We think in the future the way we work is going to be reinvented across all types of services.”

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The company has been in Montreal for around two years. Saks said he feels AppDirect is one of the first “Silicon Valley unicorns” that has made a presence in Montreal. Its Old Montreal-based office was completely renovated over the past 12 months and the company will look to bring its headcount to over 100 by the end of the year.

“We’re this high growth company that’s investing in the Montreal community and sharing best practices,” said Saks. “I think that gives street credit to Montrealers working in the Valley because all of our engineers see how great Montreal is, and vice-versa.”

It will be interesting to watch where this company goes. Where exactly does a company go after it has already, at least according to AppDirect, helped a quarter of all small businesses on earth with their cloud needs?

According to Saks, the company’s main challenge moving forward will revolve around retaining the right kind of people. The CEO thinks it’ll be about continuing the right company culture as they grow from 350 to over 1,000 heads.

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