Business Type :


Funding round :

Series E

Funding Price :

$70 million

When it comes to software development, containers are taking over the world.

But as more and more applications are broken up into growing numbers of modular containers and as more corporations are adopting Kubernetes, the Google-developed software, to manage their containerized applications, companies have grown increasingly concerned about the need to keep tabs on and secure all the data being transported around by them.

San Francisco startup Sysdig has built a thriving business by addressing just those concerns.

“Almost everybody sees [containers] as the future of how software is being built,” Sysdig CEO Suresh Vasudevan told Business Insider in an interview. “But,” he continued, “there are some really massive barriers that [companies] have to overcome in deploying containers and Kubernetes in production.”

In particular, development teams using containers and Kubernetes want to be able to monitor the performance of their containerized applications, Vasudevan said. They also want to ensure the security of their applications and data. And they want to make sure that the data they’re moving around inside their containers is done in a way that’s compliant with regulatory standards, he said.

Sysdig’s cloud-based software offers all three services — performance monitoring, security, and regulatory compliance — in a single, unified interface. It can send alerts to a company’s DevOps team if their applications are flagging, notify the security team about any threats it detects, and allow compliance personnel to set policies about how data can be shared and with whom, Vasudevan said.

Other companies, including Palo Alto Networks and Datadog, are offering similar services. But many focus on security or monitoring instead of offering a comprehensive set of services, Vasudevan said. Sysdig’s broad set of features is what makes it unique in the industry, he said.

Within any of the company’s large corporate customers, “multiple user groups rely on Sysdig,” Vasudevan said.

Sysdig has established a following among enterprise customers

Clients install Sysdig’s software agents on each virtual machine on which they are running containers. Sysdig essentially charges a per-seat license for each of those machines. Its charges vary depending on how many containers each machine is running and the number of its services clients subscribe to.

Sysdig has gained a significant following among enterprise companies, Vasudevan said. It now has hundreds of corporate customers, including at least 60 in the Fortune 1000, Vasudevan said. Among them are those that rank among the top five largest in the software, investment banking, commercial banking, and telecommunications industries, he said.

The revenue Sysdig derives from such large enterprises has grown by five times over the last two years and now constitutes the “vast majority” of the company’s sales, he said.

Despite that, the company sees lots of room to grow. While adoption of containers and Kubernetes is growing rapidly within enterprise, most corporate applications still aren’t running in container environments, Vasudevan said. As corporations shift more and more of their development to containerized applications, Sysdig is likely to see a similar uptick in adoption of its services, he said.

What’s happening in the software industry with containers is a “once in a decade, once in 2 decades kind of transformation,” he said.

Investors are similarly bullish on Sysdig’s opportunity. The company announced Wednesday that it had raised $70 million in a Series E round of venture funding led by Insight Partners. That brings to $206 million the total amount Sysdig has raised.

The company, which was founded as an open-source project in 2013 and now has some 260 employees, plans to use the new funds to expand its sales marketing efforts. It already has a sales presence in Japan, Australia, Singapore, Europe, and India, but it plans to go into new places around the world, Vasudevan said.

Sysdig also plans to use the additional money on research and development, to add new features to its software, he said. And it plans to invest in education efforts. For many of its customers, Sysdig is not only seen as the expert in securing or monitoring containerized applications, but on using or getting started with containers and Kubernetes, he said.

“The industry … is at a very early stage of adoption,” Vasudevan said.

Here is the pitch deck Sysdig used to raise its latest funding round:

The Startup Deck Slides