AppDirect Inc., which develops online stores for business software applications, has vaulted into the club of venture-backed companies valued at $1 billion or more.
The private equity arm of J.P.Morgan Chase Co. invested $100 million in the San Francisco company’s $110 million Series E round, giving AppDirect a post-money valuation of $1.04 billion, according to co-founder Daniel Saks, who shares the chief executive role with co-founder Nicolas Desmarais.
The deal shows a continued willingness among investors to sign on to lofty values in private software-as-a-service companies, even as multiples on revenue have been more modest in the public markets.
Although roughly doubling revenue on a year-over-year basis, AppDirect’s business isn’t at the levels where IPOs have been traditionally. It had $18 million in revenue in 2014.
Private-market investors are clearly bullish its potential. This is J.P. Morgan’s second investment in AppDirect this year. It also invested $30 million in the company’s D2 round. That follow-on round came straight after AppDirect’s $50 million Series D round at a $600 million valuation. Overall, AppDirect pulled in $190 million of the $245 million that it had ever raised this year. It was founded in 2009.
Other investors include Mithril Capital Management, Foundry Group, iNovia Capital, StarVest Partners and Stingray Digital, as well as individuals Henry Kravis and Paul Fribourg. All institutional investors reupped in the Series E.
The quick succession of funding rounds and the leap in valuation within a year point to AppDirect’s ambition. The company has carved out a central place in the burgeoning cloud-software economy. It helps market the thousands of software applications that are seeking customers. It also helps businesses manage the cloud software subscriptions they pay for.
“Our investors have a very long-term view and see the potential for us to power the majority of software transactions globally,” Mr. Saks said.
The company creates virtual stores that are populated by business software subscriptions from developers such as Google Inc., Microsoft Inc. and Box Inc. These stores live on sites owned by AppDirect’s customers, which act as resellers of the software. These resellers, which are AppDirect’s customers, include Samsung Electronics Co., Deutsche Telekom AG and Automatic Data Processing Inc., or ADP.
Unlike other software developers that tackle a particular piece of business needs, AppDirect has created a sort of marketplace for software. “We intensify the velocity and usage of software,” Mr. Saks said.
To read the full article on AppDirect’s business, go to Dow Jones VentureWire.