Ardoq, the enterprise architecture startup, raises $125M to help organizations make sense of their networks

As organizations continue to build out their digital architecture, a new category of enterprise software has emerged to help them manage that process. Now, Ardoq — which makes enterprise architecture tools that give organizations an accurate picture of their digital networks, including who is working on what and when and where — has closed a round that will help it build out its own business: the startup has raised $125 million in a Series D that sources close to the company tell us values Ardoq at over $300 million.

Ardoq is based out of Oslo and about 30% of its enterprise client base is in the Nordics; the rest is spread between Europe and the U.S. The full list includes the likes of Carlsberg, Condé Nast and the U.S. Federal Communications Commission. 

Erik Bakstad, the co-founder and CEO, said in an interview that the plan is to use the funding for more business development to expand that list of users, but also to invest in its product. Right now the tool is useful for building a picture of what the network looks like today, and to flag when something is crashing or potentially violating a security or data protection protocol, and to suggest how to fix it. The longer-term goal is to build more predictive analytics and modeling tools that leverage the “digital twin” that Ardoq builds of a network.

“Enterprise architecture today is very much about the scaffolding in the organization,” he said. “Our vision is to combine that with behavioral data and metrics [based on the] digital twin. This means that you can also then run, for example, scenario analysis. We will be accelerating that product roadmap.”

EQT Growth led the round with One Peak also participating. This is a significant round for Ardoq, which had up to now raised less than $40 million since being founded in 2013. But to put the outsized, most recent round into some context, Ardoq has been seeing some especially strong growth: ARR grew by 80% in 2021.

Ardoq’s expansion mirrors a lot of what has been happening in the world of enterprise software overall. Digital transformation has been the order of the day for many organizations in the last couple of years: spurred by COVID, enterprises big and small invested in updated apps, hardware and new approaches to work leveraging cloud services to meet the challenge of shifting business conditions.

But that also created an issue: more complex, interconnected systems and people working less in silos, and more interdependently — meaning, if something fails or inadvertently creates a glitch in another part of the system, it can have consequences that reach beyond a single person, team or application.

Enterprise architecture tools are built essentially to manage that: they help get a house in order, by helping a company get an accurate picture of how a system looks, and how it is working.

That in turn becomes a useful data set not just to make sure a network is running smoothly, but to feed other functions: security teams use digital twin pictures to build and run better defenses and to detect anomalies in networks, and if systems do go down or are breached, they can be used then to rebuild part or even all of a network.

Similarly, for those who are planning an organization’s IT investment, it can give them a better and more accurate picture of where resources are being allocated, and whether it lines up with what the business is aiming to do. Those managing information at an organization can use enterprise architecture models and data as part of their network audits, to ensure that data is not being used in ways that violate data protection rules. And so on.

Unsurprisingly, enterprise architecture is an area that already has a number of players. They include Orbus Software, which was acquired by PE firm SilverTree Equity in 2021; and LeanIX, which last raised in 2020, a $120 million round, and reportedly aimed for another raise last year that never happened, according to PitchBook data (however, I’ve heard that in fact that money has been raised: I will try to follow up on that separately). Enterprise companies that sell warehousing, cloud computing and other network and operational tools might well move deeper into the market over time, too.

Although platform providers might offer some degree of this kind of data to their customers already — AWS for example launched a service just last November — one argument in favor of a third party handling the information is that it is platform-agnostic and more objective when it comes to predictive modeling and suggesting potential changes or investments.

Bakstad and his co-founder Magnulf Pilskog came to the idea of starting Ardoq in the grand tradition of initially building a tool to fix their own problem.

“It was 2013, and we were doing work for large enterprises: banks, insurance companies, financial services and telcos,” he recalled. Pilskog had founded Miles, an IT consultancy, where Bakstad was one of the senior engineers. “In all of them, we struggled with the ‘iceberg problem’. Companies were making large investments in digital transformation, but they were doing so on a very small amount of information. The risk of failing was tied to the underlying complexity of those investments. IT wasn’t succeeding.”

So they devised a tool to address that, a way to map out systems, data and people “to process [and] understand how things were connected and what the impact would be if you moved one piece,” he said. “That is why many projects fail, moving one piece and the impact it has. Many people fail to understand that.” He likens the impact to an Excel sheet: “If you change one cell, it impacts all the others.”

The company has a bit of a “mechanical turk” approach to how it works, which to me says a lot about the most effective enterprise technology. Ardoq banks a lot around technology it has built to read and monitor networks, but Bakstad said that it also complements that with “workflow surveys” that it carriers out regularly among customers to get users’ perceptions of how things work. This can be often the only way to get really complete pictures of how things operate, beyond the abstractions of data that might claim things are fine, even when they are not.

The round is coming at a heady time for growth-stage investments in Europe, and once more underscores just how much the region has changed in recent years. It was not that long ago that an ambitious tech company in Europe relocated to the U.S. if the aim was to scale. Now that’s far from the norm.

Victor Englesson, the partner at EQT Growth that led this round (and is now joining Ardoq’s board), told me that his firm has evaluated no less than 1,000 startups in the last year for growth rounds. He said that this is likely to continue to grow.

“The fundamentals are here: we have more developers in Europe compared to the U.S. but valuations are still lower in general,” he said, making it “a very attractive market to operate in as an investor.” Ardoq stood out among the many options, he added, because of the business potential — he estimates that enterprise architecture tools is a €3 billion market — but also because it’s been executing well on its strategy already.

“Erik and his team have built Ardoq into one of the world’s top enterprise architecture SaaS companies,” he noted in a separate statement.