Major brands like Comcast, Samsung and Salesforce.com woo business customers with a broad range of services to bring their operations onto mobile and the cloud. One way to do that is through an application store–think iTunes or Google Play, but full of business-related apps. The app store makes the brand offering its services feel at the center of a whole business ecosystem, while a new customer has a quick way to find trusted options for file storage or signatures or employee collaboration.
It’s a standard mark of the forward-looking Internet service provider or telecom company today, but there’s a key part of it that isn’t so obvious: many of these app stores are assembled and operated by the same startup, five-year-old AppDirect. And while you’ve probably never heard of AppDirect, investors have: the company just raised $35 million in a Series C round led by Mithril Capital Management, Peter Thiel’s growth stage investment firm.
The large amount of funding is intended to keep ramping up both the number of marketplaces powered by AppDirect as well as the numbers of users each partner then brings to the app store. Twenty million businesses are now reached by AppDirect’s total network, with 30% more users month to month, says co-CEO Daniel Saks.
What’s most appealing to investors and the company’s potential to eventually turn a profit, according to Saks, is AppDirect makes money two ways–through monthly subscription fees from the companies like Samsung who hire AppDirect to manage their stores, and then in a revenue share a lot like iTunes for each app purchased by a business customer in the store.
While AppDirect isn’t disclosing its revenue, Saks says that revenue from the app sales is now growing faster than the revenue from the app stores, meaning that users are engaging more fully even as new users enter the books. And unlike iTunes with consumer-facing apps, the 10,000-plus apps in the marketplaces (think Box, Yammer and Cisco WebEx) typically charge a recurring fee per user that sends AppDirect a steady cut.
AppDirect’s new funding, which included existing investors like iNovia Capital, now values the company at roughly $300 million. But Saks says AppDirect went with Mithril following a two year courtship because the investment firm is fully onboard with holding out to become a multi-billion dollar independent company.
“If someone gave us a $2 billion offer we wouldn’t take that today. We just recently had a healthy acquisition offer. But we want to drive the business much more than we do selling out,” says Saks. “And if you want to remain as an independent entity, going public makes sense at some point.”
While major CRM platform players like Salesforce could theoretically try to get into AppDirect’s business, Saks argues that AppDirect will remain the open provider for such marketplaces, no matter how large they grow to be. More direct competitors today would be Jamcracker and veteran virtualization company Parallels.
AppDirect had just raised its Series B six months ago in October, for $9 million. While the market is certainly favorable to business software companies right now, Saks says the relatively small size of its previous round was because it was done quickly with the company’s existing investors then to fund an acquisition, Foundry Group startup Standing Cloud. Foundry is now an AppDirect investor.
Saks says AppDirect will likely make more acquisitions with the money it’s raised. The rest is the usual story: faster growth and a better product. “We want to make it easy for businesses around the world to buy the app tools they need.”