Appfire Raises $100M to Expand Atlassian App Portfolio

Appfire Secures $100 Million Investment from TA Associates

Appfire, a software development apps company headquartered in Boston, Massachusetts, has announced a significant $100 million investment. The funding was provided by TA Associates, a prominent growth private equity firm.

Company Background and Growth

Established in 2005, Appfire operated on a bootstrapped model for many years. Last May marked a shift, as the company received $49 million in funding from Silversmith Capital Partners.

Following this initial investment, Appfire strategically expanded its portfolio through acquisitions. Six companies within the Atlassian “ecosystem” have been integrated into Appfire, namely Botron, Beecom, Innovalog, Navarambh, Artemis, and Bolo.

Financial Performance

Randall Ward, co-founder and CEO of Appfire, stated the company has maintained profitability for over ten years. While specific valuation and revenue figures were not disclosed, Ward confirmed that Appfire’s Annual Recurring Revenue (ARR) has more than doubled in the last year.

Recent Growth Metrics

The company reports substantial growth since June of the previous year, including:

• A 103% year-over-year increase in ARR.
• A 258% year-over-year increase in enterprise subscription revenue, specifically from data center deployments.
• A 182% year-over-year increase in total subscription revenue, encompassing both data center and cloud-based subscriptions.

Strategic Use of Funds

The infusion of capital will primarily facilitate further acquisitions of complementary applications. Appfire intends to continue its active acquisition strategy.

According to Ward, Appfire has been acquiring businesses at a rate of approximately every six to eight weeks, and plans to maintain this pace.

Providing liquidity for existing shareholders through option exercises is another key objective of this funding round.

Historical Context: Atlassian's Bootstrapped Journey

Interestingly, Atlassian, the company whose ecosystem Appfire operates within, also followed a bootstrapped path for nearly a decade. The Australian software firm achieved profitability from its founding in 2001 before accepting its first external funding – a $60 million investment led by Accel in July 2010. This initial financing was largely a secondary sale.

Company Background and Evolution

Appfire began as a professional services firm, subsequently shifting its focus to product development in 2013. The company highlights its established expertise in the creation, launch, and distribution of applications within the Atlassian marketplace. Currently, Appfire offers 85 products on this marketplace, boasting over 110,000 active installations worldwide, covering areas like workflow automation, business intelligence, publishing, and administrative tools. 

The company’s branded applications – Bob Swift, Feed Three, and Wittified – are specifically designed to assist large organizations, including Google, Amazon, and Starbucks, in optimizing their product development processes through enhanced collaboration, improved security measures, advanced reporting capabilities, and automation features.

Founding and Early Development

“Our initial aim, 15 years ago, was to develop software applications directly for clients,” explained Ward in an interview with TechCrunch. “Marketplaces as we know them today didn’t exist at the time; neither iTunes nor Google Play were established. However, we observed a trend towards smaller application sizes, exemplified by Mozilla’s plugin approach.” Ward and his co-founder conceptualized Appfire while working in a warehouse in Maynard, Massachusetts, recognizing the potential of the name they chose.

The company’s early trajectory was altered when they were approached with a project involving the integration of two software solutions with offerings from Atlassian.

Ward recalls, “We were unfamiliar with the software at the time – JIRA and Confluence were new to us. After approximately three months, we successfully launched the project and were subsequently introduced to the co-founders of Atlassian.”

Strategic Shift and Growth

By 2017, Appfire made a strategic decision to dedicate its resources to becoming “the leading app platform and aggregator” within the Atlassian ecosystem.

“Consequently, we phased out other smaller projects and service-based engagements for Atlassian customers, concentrating all our efforts on expanding within the marketplace,” Ward stated. 

This shift prompted the company to seek external investment. However, with the most recent funding round, Ward clarified that Appfire wasn’t primarily motivated by a need for additional capital.

Instead, Appfire engaged with TA to explore the possibility of establishing more comprehensive employee equity programs, fostering a business model centered around employee ownership. They also requested the opportunity to allocate 1% of their equity to the Pledge 1% initiative.

“TA readily agreed to both requests,” Ward confirmed, “which ultimately led to securing this latest funding.”

Expansion into New Markets

Appfire is also extending its reach into the realm of business intelligence and data analytics, developing applications compatible with Tableau and Microsoft Power BI.

A portion of the recent funding will be distributed to existing shareholders, as Ward indicated. The remaining funds will be allocated to supporting continued business growth.

“We are presented with numerous opportunities for both organic and inorganic expansion,” he added. “…Sustained progress requires momentum.”

Michael Libert, a principal at TA Associates, mentioned that his firm had been closely monitoring Appfire’s development “for a considerable period.” He emphasized that the company’s applications are user-friendly, requiring minimal training, which allows customers to quickly enhance productivity “at a low cost,” driving further adoption and facilitating “a robust land-and-expand strategy.”

“We were particularly impressed by the company’s strong business model, notable organic growth, and recent strategic acquisitions,” Libert shared with TechCrunch.

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