Testlio Raises $12M to Scale Software Testing

Testlio Secures $12 Million in Series B Funding to Enhance Software Testing Capabilities

Software development frameworks have dramatically accelerated the pace of software creation, however, the complexity of pre-deployment testing continues to increase. Over the last ten years, Testlio has experienced substantial growth, establishing itself as a leading platform for software testing services.

Expanding Tester Network and Platform Investment

The company currently leverages a network of over 10,000 qualified freelance testers spanning 150 countries, in addition to its internal team of approximately 150 professionals. This recent fundraising round will be strategically allocated to enhance Testlio’s software platform for managing software testing and to strengthen its sales and operational infrastructure.

Serving a Diverse Client Base

Testlio collaborates with prominent companies producing digital products, including Amazon, American Express, Fox, Microsoft, Netflix, the NBA, SAP, and ViacomCBS.

According to Steve Semelsberger, CEO of Testlio (appointed in 2018), the company functions as an integral extension of its clients’ quality assurance departments. They also provide tailored solutions for early-stage companies seeking to optimize their testing and quality control processes after securing Series A funding.

Series B Funding Details

Testlio has announced the successful completion of a $12 million Series B financing round. The investment was spearheaded by Spring Lake Equity Partners and received significant interest, resulting in an oversubscribed round. Altos Ventures and Vertex Ventures US, who participated in the Series A round, also contributed to this latest funding.

Jeff Williams, partner at Spring Lake Equity Partners, will be joining the Testlio board of directors as a result of this investment.

Valuation and Financial Performance

While a precise valuation wasn't disclosed, Semelsberger indicated that the Series B valuation exceeds $100 million.

Strategic Approach to Capital and Growth

Testlio has maintained profitability for ten consecutive quarters and retained 75% of the capital from its Series A round. The company intends to prioritize investment in research and development (R&D) to fuel rapid expansion.

Semelsberger notes that while many Series B rounds are substantial in size, their $12 million raise is considered relatively modest. Their strategy centers on maintaining total capital investment below their current revenue run rate.

Revenue Growth and Market Demand

This year, Testlio has surpassed a $20 million annualized revenue run rate, having previously raised $7.5 million in seed and Series A funding. The company has experienced a 50% increase in revenue and nearly doubled its employee count year-over-year.

The increasing demand for effective software testing solutions is driven by the rapid proliferation of digital technologies, placing pressure on product and engineering teams to accelerate development and deliver exceptional user experiences.

Employee Equity Distribution

A significant portion of the funding – 25% – has been allocated to existing employees.

Employees with over three years of service were given the opportunity to sell a portion of their vested equity. Semelsberger explains this initiative was designed to reward long-term contributors and attract new talent by demonstrating the value of equity ownership within the company.

Platform Development and Future Investments

In addition to hiring and expanding the sales team, Testlio plans to invest further in its proprietary testing management platform. This SaaS solution aims to simplify complex testing processes through an optimized combination of human expertise and automated tools.

Platform Capabilities

“Our platform team, comprising around 50 individuals – including product managers, designers, engineers, and data scientists – has developed a system that streamlines the entire testing workflow,” explains Semelsberger. This includes test case definition, integration of manual and automated testing, and comprehensive logistics management.

Investor Confidence

Jeff Williams, partner at Spring Lake Equity Partners, stated, “Testlio embodies the characteristics we seek in our investments: growth, capital efficiency, effective innovation, and operation within a large and expanding market.” He expressed confidence in the Testlio team and anticipates continued success.