This startup secretly runs the internet - and it just got $43 million from Goldman Sachs to power the next wave of software
- Nginx has raised $43 million in a round led by Goldman Sachs.
- Nginx is tremendously popular - well over half of the busiest websites in the world rely on it as their web server software.
- The plan now is to keep building out Nginx Plus, its offering for enterprises, which is growing fast.
- The company says that an IPO may or may not happen, but it's focused mainly on continuing its 4-year streak of 100% year-over-year business growth.
You may never have heard of Nginx, pronounced "Engine-X," but it's almost certain that you've used its software - without even realizing it. After all, it's one of the startups that secretly runs the internet.
Nginx's flagship web server technology is incredibly popular, with 450 million websites using it, including sites operated by Netflix, McDonalds, and Starbucks. Indeed, Nginix is in use by 64% of the busiest web sites in the world. It's growing fast, too: those numbers are up from 150 million websites and 49.2% of the busiest sites in 2016, and still well ahead of leading competitors Microsoft and the popular free Apache web server.
Now, Nginx has taken another $43 million of investment capital, in a round led by Goldman Sachs Growth Equity. As part of the deal, Goldman's David Campbell will take a seat on the board at Nginix. All told, Nginx has now raised $103 million in venture funding, including the $8 million it last raised in 2016.
The investment comes as Nginx sees a streak of strong growth in its business, CEO Gus Robertson tells Business Insider. The company has grown its business 100% year-over-year for the last 4 years running, Robertson says, and now has 1,500 paying customers.
"Our growth in the enterprise segment has been our focus for the last few years, and we've been incredibly successful there," Robertson says. It's a far cry from when he joined the company in 2012, and it had "virtually no" customers, he says.
The "glue" that binds the world of apps together
Driving that growth is the rapid expansion of the software economy, says Robertson. He describes Nginx as "the glue that stitches modern application architectures together."
The idea, he says, is that companies large and small now have to provide a similar level of service as Silicon Valley giants like Facebook and Google. If an app doesn't load fast enough, or isn't reliable, they'll bounce off your service and straight to a waiting competitor.
"They have zero tolerance for your performance," Robertson says. "They want those apps to perform equally and the experience to be the same."
The root of the Nginx model is its namesake web server, which is an open source project managed by the company, but with contributors all over the world. It's long been championed as offering better performance than the competition, and available as a free download to boot.
To actually make money, Nginx has been investing in Nginx Plus, its premium paid platform. It builds on that core web server technology with security and administration features that make it easier for large companies to get best use out of the Nginx technology, Robertson says. Much of the capital will go into further developing Nginx Plus, as well as expanding headcount from 220 up to 300 by the end of the year, and expanding into new international markets.
From Campbell's perspective, Nginx's push with the Plus platform is what got Goldman Sachs so excited to invest. From Goldman's own customer research, companies are investing heavily in modernizing their applications - and looking for tools to help them do it.
"Nginx kept coming up as an important part of that equation," says Campbell.
Indeed, Nginx plays a major role in the market for so-called software containers, enabling a way of building software called "microservices." Essentially, you break down a piece of software into a bunch of figurative Lego bricks, which helps you modify the structure without tearing it all down every time. It helps teams move faster, and companies to get more value from their engineering teams. That's a big plus for potential Nginix customers.
"Applications are just more and more critical to businesses," says Campbell.
Looking even further ahead, Robertson and Campbell both say that while Nginx might one day have an IPO, the focus is on building the product and business first. If its revenue continues to grow at the rate it has, says Robertson, that day might come about sooner, but it'll take some focus. Campbell says that it's the intention of Goldman Sachs to give Nginx that breathing room to grow its business.
"Our view is to build companies that are self-sufficient and able to control their own future," says Campbell.