Codefresh just raised $27 million to help developers release code faster for apps that run on the Google-born cloud computing project Kubernetes
- On Monday, the startup Codefresh announced a $27 million funding round led by Red Dot Capital Partners, with participation from Shasta Ventures and other existing investors.
- Codefresh builds a continuous integration and continuous delivery platform, meaning it helps developers release code faster and more often.
- Codefresh is specially built for cloud software like Kubernetes, a popular open source cloud computing project created at Google.
Early on, when Codefresh cofounder and CEO Raziel Tabib was pitching to VCs, one potential investor would butt in every two or three minutes to say something along the lines of, "You know what? I can do it in Jenkins, too."
Jenkins is one of the oldest and most widely used continuous integration and continuous delivery tools on the market These tools, referred to as CI/CD, are meant to help developers build and release code faster and more often. While Jenkins has long been the well-known name, Tabib says that Codefresh is "more modern and more aligned with not only the latest technologies but also the extension of the role of the developers," while Jenkins is "really getting outdated."
Codefresh's platform is specially built for apps that run on the popular open source, Google-created cloud computing system Kubernetes, and the company has had success reeling in customers that are looking for something more modern.
At that early meeting where an investor kept bringing up Jenkins, Tabib at one point fired back that the VC should imagine Zoom CEO and founder Eric Yuan pitching to investors and getting endless rebuttals that everything he had pitched could be done with WebEx.
"It's not about what you can or cannot do with Jenkins," Tabib said. "You can script yourself to death, but is it easy to retain? Is it convenient for your team to work with it? Is it easy to build?"
Codefresh is, Tabib says.
The company says it's had great success reeling in users to try out Codefresh's free version. Many then convert to a paid plan later on.
Its popularity among users helped Codefresh land $27 million in fresh funding, announced Monday, with the round led by Red Dot Capital Partners with participation from Shasta Ventures and other existing investor. The startup's total funding has more than doubled to $42 million and while it declined to disclose its valuation, it says it "has increased substantially." PitchBook lists Codefresh as valued at $36 million after its last fundraise in July 2018.
"The usage of our platforms is going above and beyond our expectations," Tabib told Business Insider. "It's a strong signal that there is a huge value with the product. If you accelerate and grow the customer base with expansion, it can grow even more."
Codefresh's cofounders came up with the idea while they worked at HP
Codefresh, now based in Mountain View, California, originally launched out of Israel in 2014. Prior to Codefresh, Tabib and co-founder Oleg Verhovsky worked at Israeli software company Mercury, which was eventually acquired by HP. There, they started talking about building a new CI/CD platform, since the team at HP was struggling with legacy products.
What's more, Tabib and Verhovsky felt that their ability to make an impact on the company diminished as Mercury merged into HP. Eventually, they left HP to start Codefresh, convincing an HP manager to invest some seed money into the startup early on.
"We felt strongly about what we wanted to do and where the market was going," Tabib said.
Tabib says he learned to aim high while building Codefresh and not compromise when it comes to building a "brilliant" team. Still, it's been a challenge to build a platform for technical customers who had high expectations for performance.
"We were aiming for excellence, and it's something we set for ourselves as a high bar," Tabib said.
What Codefresh plans to do with its funding
Tabib says Codefresh was able to attract investors because VCs could see that his team knew the market "inside out." In addition, many of the world's largest companies are adopting Kubernetes, making Codefresh's products especially relevant.
Isaac Roth, partner at Shasta Ventures who previously led the creation and growth of Red Hat's Kubernetes platform OpenShift, says Kubernetes has become popular because it allows companies to run their applications anywhere they want, whether in private data centers or on the cloud.
When you throw Codefresh into the mix to help run these applications, it helps make the development process much more efficient, he says.
"That's really special, something no other vendor is providing," Roth told Business Insider. "It's why we think it will be a huge business."
With the new round of funding, Codefresh plans to double-down on the product's security and form a strategy to take the company to the next level. It's also putting effort into expanding the apps Codefresh works with and strengthening the product.
"If we can make software engineers more effective, that means every single company has enormous value in our product," Dan Garfield, chief technology evangelist at Codefresh, told Business Insider.
Tabib says some customers were particularly impacted by the coronavirus crisis, and closing deals has taken longer in some cases. Other customers are seeing more demand, and they expect to grow through the pandemic.
It's a good opportunity to invest in these efforts while the market is slow because once things are back to normal, Codefresh can support a much larger customer base, Tabib says.
"We're also super excited with the funding that will allow us to accelerate even more," Tabib said, "And put more effort into the product, technology and success with customers."
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