Spiceworks, which develops network monitoring tools for corporate IT and managed service providers, has raised $16 million in series C funding. The financial move is noteworthy for several reasons involving managed services, software as a service (SaaS) and advertising-based systems. Here are some quick observations.
First up: Plenty of MSP-, SaaS- and remote management companies seem to be lining up funding. Recent examples include iYogi, Peak10 and SupportSpace. And don't forget: Quest Software in December 2009 acquired remote monitoring specialist PacketTrap.
Interesting Business ModelBut Spiceworks seems different: Instead of relying on software licenses, the company's network monitoring tool leverages online advertising, social media and freemium strategies. The company claims:
Spiceworks is enabling ‘Social IT’ by combining systems and network management software with a rapidly growing and active Facebook-like community of IT professionals. Organizations of all sizes use the software and integrated online community to collaborate with each other and support the management of their IT networks and services.I concede: I've been skeptical of Spiceworks' deployment and installed base figures because they seem astronomical. The company claims it has...
- more than 850,000 users in 196 countries
- over 1,000 new IT pros joining every day
- penetrated more than 25 percent of all businesses that have more than 100 employees
- Plus, technology companies like Cisco, Citrix, Dell and Intel are helping with plugins for Spiceworks' platform
Money MattersMeanwhile, some key names are backing Spiceworks' vision. Big investors include Institutional Venture Partners (IVP) -- which has also backed Twitter, MySQL, HomeAway, Netflix, Business.com and Zynga.
Spiceworks also has some key names on its board. One example: Mike Maples Jr., managing general partner of Maples Investments. That investment firm has also pumped money into Digg, Hyper9, Solarwinds and Twitter. During an earlier career stop, Maples oversaw worldwide product marketing at Tivoli Systems.
Translation: Maples seems to understand the converging point between social media (Digg, Twitter) and systems management (Solarwinds, Tivoli, etc.). Solarwinds, not by coincidence, launched its IPO in 2009.
Backed by its third round of funding, Spiceworks seems intent on more growth. I wonder how many MSPs will give it a try.