Jitterbit, an enterprise software company whose cloud-based app integration platform is used by some 35,000 customers to knit together disparate apps, is today announcing a $20 million round of funding led by KKR. The funding will be used for hiring, to build out Jitterbit’s products for specific verticals and to grow the business as the it moves towards an eventual public listing, according to its CEO.
“We expect to get to an IPO in three years,” George Gallegos told TechCrunch.
Relatively speaking, Jitterbit is no spring chicken: it’s been around since 2005, building open source tools for companies that want to integrate apps that don’t necessarily work together, tapping into the kind of integration and aggregation of app silos that companies like Slack are currently using to dazzling effect. This is the company’s first significant round of funding.
The previous investment — a strategic round mainly from Salesforce and Autodesk in 2013 — totalled only $5 million (a figure which doesn’t appear to have been disclosed until now). Gallegos said that investments from the two companies came after both first tried to buy Jitterbit. “We were approached by our strategic partners Salesforce and Autodesk, but they invested instead because they saw they could get more growth this way,” he said.
KKR was chosen after a period where more than 50 VCs knocked on Jitterbit’s door to talk investment, Gallegos said. The company went with KKR because things seemed to click with the firm.
“It’s one thing to take money and another to find someone to work well with,” Gallegos said. “KKR was the first firm where we found close alignment of our business goals.”
While KKR may be better known as one of the giants in the private equity world — it currently has $14 billion of equity across 60 companies — this investment is a mark of a somewhat newer direction for the finance company, investing in earlier growth rounds for startups as they gear up for more expansion.
“Over the past 18 months, KKR has made a concerted effort to look at smaller and faster growing startups in the telecoms media and tech space where we think there is interesting opportunities,” Vincent Letteri, the KKR director who will join Jitterbit’s board, said in an interview with TechCrunch. “We still think we are at the early stage of technology, where it is starting to impact every industry in the world.”
He describes the businesses that KKR is investing in as “high growth and scaling.”
“They are through the technical risk phase of developing a product or service, and they are generating revenues and are potentially more at an operational risk from scaling challenges,” he added. “That is something we can help manage.”
There is no specific fund at KKR dedicated to earlier-stage startup investments, he said: the money comes off KKR’s balance sheet, making it potentially one of the bigger startup investors should it choose to pursue that more aggressively. (Previous investments in startups have included DoubleDutch, Ping Identity and ClickTale.) And for the record, I asked about Uber’s latest round (how can you not?), and got a firm no-comment both from Letteri and his PR manager who had been silent until that point on the call.
Turning back to Jitterbit, the company is not disclosing revenues nor valuation in this round, and Gallegos said that it is still unprofitable “by choice.”
But there are some encouraging numbers it is providing. Its products — which range from general solutions for small businesses through to products built for specific verticals like healthcare — currently have an average churn rate of 10% (commendable for an SaaS product). And they bring in annual revenues of anywhere between $10,000 to $1 million annually from its wide range of customers, which span from SMBs using its more general Harmony platform through to Chrysler, Shell, Jim Beam and Time Warner taking more bespoke or specialised services.
The vogue for cloud-based apps and platforms to manage them better has undoubtedly spawned a number of competitors for Jitterbit, with some lists of similar products daunting in their size. Gallegos notes that some of the most prominent include Boomi from Dell and Mulesoft. Gallegos says that up to now one of Jitterbit’s unique selling point has been its ability to create solutions that are especially helpful to specific verticals.