AppDirect has closed a $50 million Series D funding round led by Peter Thiel's Mithril Capital. Existing investors include Foundry Group, iNovia Capital and StarVest Partners, bringing AppDirect's funding total to $120 million.
The San Francisco-based startup makes a white-label app marketplace that allows businesses to sell software-as-a-service applications to other businesses. It currently powers the marketplaces of Red Hat, Staples, Comcast, Samsung and AT&T -- providing app distribution services to more than 20 million businesses around the world.
According to AppDirect co-founder and co-CEO Daniel Saks, the company has purposely flown under the radar since it's founding in 2009. The desire to keep a low profile has been one of its core strategies, along with the plan to keep the company independent.
"The founding purpose was to be a long term and enduring brand," Saks said in an interview. "And that means staying independent. All of our decisions are with that long-term vision, and we have been able to maintain company control and keep focused on that goal."
Saks says that AppDirect's revenues have been doubling annually, with $18 million in sales during 2014. AppDirect makes money through revenue shares, or a transaction fee, made when apps are sold via an AppDirect-powered marketplace. The company also charges a monthly licensing fee to companies that rebrand an AppDirect marketplace as their own.
So while the company's profitability is not entirely clear, success is definitely in AppDirect's favor. It's business model is powerful -- it removes the R&D barrier for companies needing an app marketplace in a short period of time. And there are plenty of companies that will be spending on these types of marketplaces. Estimates place the growth metrics for cloud-enabled businesses to upwards of $180 billion globally. Those figures undoubtedly played a role in securing AppDirect's financing growth and $600 million valuation.
"AppDirect opened a new market for software makers by helping small businesses find software and use it well," said Thiel, who serves as chairman of Mithril's investment committee, in a statement. "As that market grows, Nicholas (Desmarais) and Daniel (Saks) have put AppDirect on track to turn their early wins into a durable franchise."
AppDirect will use the latest cash haul for research and development, scaling its marketing and client services teams, and expanding its presence in Asia and Latin America. The company also intends to increase its workforce by roughly 300 throughout offices in Munich, Montreal and Silicon Valley.