Coverity Inc., a San Francisco-based provider of software quality and security improvement solutions, has raised $22 million in its first round of institutional funding. Foundation Capital and Benchmark Capital co-led the deal, with Paul Holland (Foundation), Mike Schuh (Foundation) and Bruce Dunlevie (Benchmark) taking board seats.
Coverity, Inc., the leader in improving software quality and security, today announced the company has accepted its first round of outside funding from Foundation Capital and Benchmark Capital. The $22 Million round of financing follows 5 consecutive years of cash flow positive growth for Coverity, during which time the company was successfully bootstrapped by product sales. Coverity will use the funds to extend sales and marketing reach, and to expand its product portfolio through both acquisition and accelerated internal research and development efforts. The company today also announced a new board of directors that includes a number of senior executives from successful development and testing companies such as Mercury Interactive, Cadence and Pure Software.
“It is a rare opportunity to close an initial round of funding with an enterprise software company that's been cash flow positive for half a decade and boasts more than 400 customers,” said Tony Zingale, former CEO of Mercury Interactive and new Coverity board member. “Previously, Mercury created a billion dollar business helping IT quality assurance teams validate and monitor the performance of production IT systems. Coverity's opportunity is to tackle the broader issue of software integrity but to address it on the developer's desktop when problems cost an order of magnitude less to correct.”
Coverity's expanded product portfolio will allow the company to establish a new presence in targeted segments of the market for Application Lifecycle Management tools. According to a 2007 Gartner report on Application Development and Project and Portfolio Management Software, the worldwide market for these tools is forecast to grow from $7.2 billion in 2006 to more than $9.3 billion in 2011.1
“The process of software development today is too manual and ad hoc to succeed in the face of escalating code complexity due to outsourcing, multi-threaded applications, aging legacy code and a host of other factors. We believe this increasing complexity will require a new toolset on every developer's desktop within the next five years,” said Seth Hallem, CEO of Coverity. “The infusion of capital and veteran leadership through our expanded board will allow Coverity to bring new products to market that deliver an integrated approach to designing and developing robust, secure software applications as we continue to press our advantage in static analysis.”
Coverity will use this round of investment for acquisitions, internal product development, further expansion into international markets and additional growth for its U.S. sales force to help meet demand for Coverity Prevent