With customers as varied as large banks, Tesla and the Container Store, AppDynamics helps corporations find anomalies in computer code before they cause major problems, a sub-industry called âapplication performance management.â
âAs more of the worldâs business is moving to software, someone has to be watching to make sure that software is working,â David D. Wadhwani, the new chief executive of AppDynamics, said in a phone interview.
That market potential helped AppDynamics, which is based in San Francisco, close a new round of financing, despite a difficult market for private fund-raising, he said. AppDynamics is expected to announce on Tuesday that it has raised $ 158 million, led by General Atlantic and Altimeter Capital.
It has nevertheless been a difficult market for private fund-raising. A few companies, like the ride-hailing apps Uber and Lyft, have been in strong demand from investors. But other start-ups have been accepting lower valuations than they desired, and some have not been able to raise money at all.
AppDynamics says it generates revenue by charging each of its 1,600 customers based on the complexity of its code and the number of users it has. The company declined to provide specific financial figures, only to say that the company is growing âvery quickly.â
Among AppDynamicsâ customers is Xerox Government Healthcare, which creates applications for Medicaid in multiple states. Gorkey Vemulapalli oversees the unit, which is responsible for seven million lines of code, and he said that before using AppDynamics, five people would spend a 40-hour workweek trying to pinpoint any issues. Now it takes minutes, he said.
This business is growing rapidly but is filled with many heavy-hitting and deep-pocketed rivals. AppDynamics was ranked 11th in 2014 based on revenue, after other providers such as Dell, Microsoft, Hewlett-Packard (before its split into two companies) and New Relic, according to a May study by Gartner.
AppDynamics was founded in 2008 by Jyoti Bansal, who took the role of executive chairman and chief strategist when Mr. Wadhwani started.
Mr. Wadhwani joined AppDynamics about two months ago from Adobe, where he had spent more than a decade, most recently leading the digital media business, which encompassed the photo-editing software Photoshop. Mr. Wadhwani helped transform Adobe from a perpetual license model to a high-growth subscription model, quadrupling its market value over five years, according to Brett Rochkind, co-head of Internet and technology at General Atlantic.
âWe feel that David is well positioned to build upon AppDynamicsâs strong foundation and lead the company through its next phase of growth and development as the leading solution for application performance management,â Mr. Rochkind said in an email.
AppDynamics is also expected to announce that Robert Swan, an operating partner at General Atlantic and former chief financial officer at eBay, will join the AppDynamics board. Adage Capital, Industry Ventures, Goldman Sachs and Cross Creek Advisors also participated in the round.
âYou really have to look forward and understand that no business in the future is going to transact without software,â Mr. Wadhwani said. âThe need to monitor that software is going to be as fundamental as making sure your brick-and-mortar store is open.â