AppDynamics snags $20M for Web application solutions

Kleiner, Greylock, Lightspeed betting on the critical need for application management solutions

Most businesses with any web presence whatsoever have web applications in some capacity. With multiple services and systems that these applications have to run on, many companies are turing to application management companies to assure that they improve the customer experience and avoid any downtime to solve application problems.

One such application performance management company, AppDynamics, announced Tuesday that it has raised $20 million in its Series C round.

This round was led by Kleiner Perkins Caufield & Byers and had participation from previous investors Greylock Partners and Lightspeed Venture Partners.

This round brings the company's total fundraising to near $36.5 million.

AppDynamics says that it will use the capital to fuel the company's growth, especially in the expansion of its engineering and sales teams to aggressively acquire new customer acquisition.

"We see AppDynamics as perfectly positioned to take advantage of a seismic shift in how web applications are being created and managed," said Matt Murphy, Partner at Kleiner Perkins, in a statement. "Applications are moving to distributed, cloud-based architectures, a sea change that is already having a tremendous impact on the operations and development teams responsible for performance and uptime. AppDynamics' phenomenal growth and success to date proves that they're well positioned to take advantage of this transformation and help companies manage these new types of business-critical applications."

How application managment works

AppDynamics is in the newly capitalized area of application management that addresses the shift in communication and commerce online where customers interacting with multiple computing systems for different transactions.

Essentially, AppDynamics runs diagnostics in online customer traffic to pinpoint where problems are building up or occurring so that they can be addressed before any major shutdown is necessary.

"Cloud computing is a once-in-a-generation IT shift," said Jyoti Bansal, founder and CEO of AppDynamics, in a statement. "The application management market has multiple billion dollars of annual IT spending."

In 2011, AppDynamics saw a 400% jump in the number of bookings -- with international sales contributing more than 35% of it.

Last year, the company also surpassed 60,000 users of AppDynamics Lite, a free download that helps IT Operations troubleshoot performance issues.

AppDynamics’ solutions have worked with the likes of Netflix, Priceline and TiVo  to monitor and scale their production applications.

The San Francisco-based company is in the same market as New Relic.  The cloud-based performance tool software, New Relic, announced in November that it pocketed $15 million in a Series D round of funding. The funding was led by new investors DAG Ventures and Four Rivers Group -- existing investors Allen & Company, Benchmark Capital Tenaya Capital and Trinity Ventures also participated.

The San Francisco-based company, founded in 2008, has received at least $33 million in funding to date. New Relic has more than 13,000 active customers and manages six billion transactions in production each day in what the company estimates is currently a $3 billion market. New Relic clients include Comcast, Nike, and Zynga.

Companies with very heavy online customer use know that if the customer experience with their applications is not quick and easy, then that can equate to loss of revenue -- especially when competitors make online interactions simple and stress-free.

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