Vector Capital Makes Controlling Investment In CollabNet Developer Platform

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CollabNet is one of the leading agile development platforms in the enterprise and the company behind the Subversion version control software. It has millions of users on its platform, which launched back in 1999. Today, Vector Capital is making a controlling investment in the company as part of a concurrent equity round that includes another, undisclosed investor.

The company did not disclose the size of the round, but Vector Capital currently manages over $2 billion in equity capital and typically invests from $100 million to $300 million in each of its portfolio companies.

Vector Capital may not be a household name, but the company has previously invested in companies like Corel, LANDesk, RealNetworks, Register.com and WinZip. The firm says it usually invests in companies with at least $100 million in revenue.

As Vector Capital partner Rob Amen told me, CollabNet is exactly the kind of company the firm likes to invest in. “CollabNet is a gem,” he told me. “It is rare, as a technology investor, to get an opportunity like this. It’s A+ technology and an incredible management team with a ton of experience. All it needs is a partner with deep pockets that can help it grow.” As part of this investment, Amen will take a seat on CollabNet’s board.

Last year, CollabNet raised a $2.5 million debt round, which today’s round will wipe out. The company raised most of its funding in its early years, with an $11 million round in 2002 and a $9.5 million Series B in 2005. Previous investors include Benchmark, Norwest Venture Partners and Intel Capital.

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According to CollabNet CEO Bill Portelli, the 300-person company used this funding to grow through the recession but the industry wasn’t quite ready for its solutions yet. While CollabNet was among the first companies to enable software development in the cloud, enterprises weren’t quite ready for this concept. It’s only now, in his view, that enterprises are starting to catch up with CollabNet’s vision and are starting to adopt agile development.

“What we are seeing now,” he told me, ” is that the world is moving to a distributed and fragmented development model, with data inside and outside the company. There is an ever-increasing need for developers to use their favorite tools, but enterprises also need transparency into this.” This fragmentation, he also stressed, is leading to integration issues for enterprises.

CollabNet’s tools include its set of TeamForge application lifecycle management tools that enable teams to collaborate in a distributed team while using a large variety of tools, whether that’s Subversion or git, Jenkins, Eclipse, Visual Studio, ScrumWorksPro or any other of over 50 tools integrated into TeamForge. For smaller teams, the company offers CloudForge, a hosted version of Subversion, Git and TeamForge.

The company tells me that there are currently approximately 9 million Subversion users, with 1 million on paid plans. TeamForge has about 425,000 users from several hundred customers. The company also tells me it has trained about 17,000 “ScrumMasters.”

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“We don’t play favorite,” Portelli said. Even though the company developed Subversion, which was essentially the first open-source version control software, it was also one of the early adopters of the rival Git version control system, for example. “We are the only company that pulls together so many open source technologies in such a scalable way,” he also noted.

Over the last few years, the company made a number of pricing changes to better compete with the likes of Atlassian, GitHub and BitBucket, all of which offer similar development and collaboration tools. These changes included the introduction of free accounts for its platform. This has helped CollabNet prime its pipeline for selling paid accounts. And, as the team told me, its website traffic tripled over the course of the last year, too.

To harness all of this interest in the platform, the team needed today’s investment because, as Portelli noted, the company’s main challenge recently was capital.

With this new influx of funding, CollabNet plans to increase its investment in its agile and DevOps products. It also wants to scale up its marketing efforts to teach companies about agile development practices and how to adopt them at scale. The company also plans to use the funding to make a number of acquisitions in the future.