June 19--Faster. Bigger. Now.
Sizzling Portland startup Puppet Labs said Thursday morning that it has closed a $40 million venture round as it aims to seize control of an emerging market for data center management software, a field it helped create.
Already among Oregon's best-funded young tech businesses, Puppet's total haul is $86 million after the latest round. It says it will spend the new money to ramp up hiring and fill its big new downtown headquarters, as well as expand a fledgling outpost in Europe.
"We want to be a $100 million company, but we don't want to stop there," said Puppet chief financial officer Bill Koefoed, whom the company hired away from
There's still a long way to go, though Puppet is moving quickly in that direction. Revenues nearly tripled last year, to $25.9 million.
Puppet had been planning to break even on cash flow this year, according to Koefoed.
Instead, the company's board and its backers -- which includes big tech companies and blue-chip venture capitalists -- believes it has an opportunity to build a big software company in a field that others have neglected, if it moves quickly.
"There's just a huge amount of greenfield to take in the market," Koefoed said.
Oregon tech entrepreneurship is enjoying a hearty revival after a fallow decade following the dot-com bust. Thursday's $40 million investment in Puppet is the second on that scale this year after 13-year stretch when no Silicon Forest company raised that much in a single round. (Act-On Software's $42 million round in April was the other big round.)
The rebound is evident in jobs data, which shows the state has added thousands of tech jobs since bottoming out in 2009. Puppet has been a big contributor -- the company, which had just 110 employees at the start of 2013, now numbers more than 300. Three-quarters of those workers are in Portland.
Puppet moves into its new headquarters late this year with room for 500, and an option to lease even more space. Koefoed said Thursday's funding round will help fund future job growth and Puppet's new lease, which he was negotiating at the same time he was arranging the new venture funding.
Information technology managers use Puppet's software to manage data centers and large corporate computing systems, automating work they had been doing by hand. Puppet competes against established players such as Hewlett-Packard, BMC Software, CA Technologies and IBM, along with a Seattle startup called Chef.
Puppet and Chef are both taking market share from the big companies, according to Koefoed, but he said Puppet's biggest competitor is its own open source product -- an entry point the company hopes will drive people to subscribe to its full-featured product.
Prior Puppet investors
Big investment rounds come with big headlines, and big expectations. Koefoed said Puppet chief executive Luke Kanies delivered that reality-check to employees last week to stress that the funding is an indication of opportunity, not a measure of success.
"What we don't want to happen is to have people say 'Woo-hoo!'" Koefoed said. "We have to be very careful and thoughtful about how we manage our shareholders' money."
Still, he said the new funding, new downtown lease and continued growth are all indicative of just how big Puppet's opportunity is.
"We're blazing a new journey, and it's fun to do things you've never before," Koefoed said. "It's super-invigorating."
-- Mike Rogoway; twitter: @rogoway; 503-294-7699