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AppDirect Enters Unicorn Territory With Latest Funding

The $140 million round will fuel global channel investments and R&D.

AppDirect has been firing on all cylinders over the past year, adding a reseller program, closing a funding round, completing a major acquisition and inking a technology partnership with Microsoft. To continue that breakneck pace while expanding into international markets, the SaaS brokerage earlier this month accepted more venture funding that pushed its valuation north of $1 billion.

Having joined the unicorn club with the latest investment - $140 million - AppDirect will be able to keep scaling globally while developing new features to support the VARs and MSPs using its white-label platform to deliver curated app stores to their customers, according to Daniel Saks, the company's CEO.

AppDirect's plan for growth relies on further empowering that burgeoning network of cloud software resellers through which it now reaches some 130 million business users, Saks told CRN.

[Related: Zendesk, Ready To Launch A Channel, Turns To AppDirect To Empower New Partners]

"It really validates the metrics we have, and is also validation that the VAR and reseller model really applies in cloud," Saks told CRN. "Our investors have really dived into the metrics and are really confident in the channel model."

The latest funding comes only eight months after AppDirect closed a Series D round of $50 million.

Soon after that round, the company struck a deal with Microsoft to enable its partners to sell Office 365 from its platform. Last month it acquired another online marketplace platform, AppCarousel, which focuses on distributing software for Internet-of-Things devices.

The flurry of business deals and new capabilities — including a recently launched self-checkout service — warrants the aggressive fundraising, Saks said.

Five years ago, AppDirect's founders saw a fast-growing market for enabling SaaS to proliferate the enterprise. Since then, there's been exponential growth in the number of cloud apps available.

When the company was founded in 2009, it polled cloud-software developers and found the channel share of its sales was close to negligible, Saks said.

A recent AppDirect poll revealed that about a quarter of cloud software now goes to market through channel resellers, Saks said. He expects that share to eventually rise to between 60 and 80 percent.


For that reason, "a lot of our investment is focused on enabling small and long-tail resellers and VARs," Saks said. "We want to be able to reach more and empower more resellers in the world."

Those investments will yield new cloud management tools to help resellers deliver services and cross-functional capabilities such as identity management, catalog management, single sign-on, a newsfeed for visibility, proactive recommendations and incentives to encourage partners to add value.

"We want to be able to show the success stories to encourage VARs to embrace the cloud," Saks said. "The channel is being reborn in the cloud."

Mark Constantino, CEO of managed services provider MyCloudCure, told CRN he was elated to learn of the latest AppDirect funding, and the outlook for investing the money, at the company's partner summit a couple weeks ago.

MyCloudCure's managed IT service wouldn't be possible without the AppDirect platform, he told CRN.

The "only reason we can do that today is AppDirect, because we've integrated our service solutions with their cloud service brokerage," he said.

Integrating with AppDirect's platform enabled the Nashua, N.H.-based company to syndicate and bundle its services, selling to a geographically dispersed clientele what amounts to an IT department delivered from the cloud.

MyCloudCure started cautiously, working with AppDirect about two years ago, looking to distribute its small business solution through different channels. It was the first partner to integrate with the hosted checkout system and billing service released as part of AppDirect's monetization suite, and that was a game-changer, according to Constantino.

"For VARs and MSPs and developers around the world, having that one-stop shop to sell SaaS for every channel is probably the biggest attraction," he said.

"We can resell anything within their marketplace. We can start to sell directly and indirectly to different resellers and VARs and developers who want to bundle solutions. It's a huge opportunity to build a channel in the cloud," Constantino told CRN.

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