Just a few minutes ago, uTest announced that we’ve received a $17MM D round of funding led by QuestMark Partners. Obviously, we’re pumped about this news and what it means for the future of uTest, as well as the future of software testing. So what does it mean, exactly? I’m glad you asked…
Many people will look at the investment of $17,000,000.00 (yeah, I added the cents because typing that many zeros is oddly fun) and say “sheesh, that’s a lot of cash!” But, as with any investment, the money is only part of the story. So with that in mind, I wanted to provide an inside look at the how this deal came about, why it came about, the parties involved, and last but not least, what we’re going to do with all that dough.
Let’s Make a Deal
As the D round implies, this isn’t our first dance with VCs. In fact, this brings our total funds raised to more than $37MM across four rounds since we opened our doors in 2007. For those keeping score at home, that’s $30MM in the past 15 months alone. We were blown away by how insightful the crew from QuestMark is, and how quickly they “got it”. And we were excited (though not surprised) that our existing investors participated fully in this round, including Scale Ventures, Longworth Partners, Egan-Managed Capital, Mesco Ltd and MTDC.
In fact, this D Round was oversubscribed (i.e. we had to turn down additional funds that investors wanted to give) and competitive (i.e. we had multiple parties to choose from). Because of these factors, and our increasingly steep growth, our valuation more than doubled since our C round in late 2010. Not too shabby.
And since we’ve achieved year-over-year growth of 250% over the past three years – it’s not hard to figure out why our investors were ready to put their chips on the table and make one of the largest investments ever in a crowdsourcing company. Basically, it demonstrates that we’re onto something big – and just as importantly, that the opportunity before us is enormous.
If you scan the recent headlines, you may have noticed that VC funding of crowdsourcing companies is heating up. In the past year, more than $75MM has been invested in crowd-driven firms, with a median investment of $5MM. Clearly, this model is no longer considered experimental, but rather as a high-growth way to deliver expert services. And as a way to provide exceptional value – to customers, to the community, and to investors. That said, the momentum around crowdsourcing had little to do with our decision to raise additional funds.
Over the past four years, uTest has seen massive customer adoption of our in-the-wild testing services, including big brands like Google, Skype, Intuit and Answers.com, as well as startup stars like Bump, Trulia, Vlingo and Acquia. The growth in our customer base has been great, but the opportunity before us is even greater. Want proof? Just ask yourself this – how patient are you with websites that hang or don’t render properly, or mobile apps that don’t work when & where you need them. Yeah, me too.
Of course, our revenue and customer base aren’t the only things growing around here. If you recall, we recently dove into other types of testing services, including security, load, localization and usability, so the latest round of investment will help us further refine and expand our offerings.
With this latest round, we don’t expect to maintain our steep revenue growth… we expect to significantly increase it. We’ll do this by:
- Educating the market about the shockingly high cost of apps that work fine in the lab, but not in the hands of users…in the wild
- Expanding our footprint from our current locations in Boston, NYC and San Francisco to include Seattle, Dallas Fort-Worth, LA, Chicago, Atlanta and others hot spots where apps get created
- Creating tools for developers & testers to enable them to launch better web and mobile apps
- Recruiting specialized testers, including more security experts, linguists and performance engineers
- Evaluating opportunities for merger and acquisition that come across our radar
I can’t thank our current group of investors enough for their belief, advice, financial resources, and most importantly, the freedom to learn and grow. Other groups who have earned my gratitude include:
- Our employees for their tireless dedication and endless creativity
- Our customers who know better than anyone that in-the-wild testing is an necessary part of launching apps that their users love
- Our community of testers for their passion, talent and professionalism
If you’re interested in my take on the current climate of raising VC funding (tough and getting tougher), or my advice to other entrepreneurs who’re trying to raise money, I’ll put together a post, and possibly a video, later this week. And if you have a specific question, drop me a note in the comments and I’ll respond in the aforementioned future post.
One Thing That Won’t Change
For those who fear we’ll go corporate, begin acting stuffy, or start wearing something nicer than jeans & t-shirts… DON’T. We will be the same quirky, loud, (sometimes) funny, maniacally focused, obsessively detailed crew we’ve always been.
Sincere thanks to our friends, families and fans. We love that you challenge us every bit as much as you support us.