HashiCorp Valuation Surges Above $5 Billion With Latest Funding Round

Major investors in public markets led the DevOps superstar’s $175 million E Round, highlighting “it’s likely that our future is in the public markets,” CEO Dave McJannet tells CRN.

HashiCorp CEO Dave McJannet told CRN the startup’s latest funding round, which imparted a valuation north of $5 billion, will drive further demand for services to its rapidly growing channel.

The San Francisco-based DevOps pioneer, among the fastest growing independent developers of open source cloud-automation technologies, will invest its latest haul of $175 million across a portfolio of products that have seen widespread adoption throughout the enterprise IT landscape, McJannet said.

While HashiCorp’s founders started work on the company’s first project, Vagrant, essentially in their college dorm, the company’s expanding portfolio—Terraform, Vault, Consul, Nomad—are now staples in Fortune 500 environments and brought to market by some of the world’s largest systems integrators.

[Related: CRN Exclusive: DevOps Tooling Superstar HashiCorp Launches First Channel Program]

HashiCorp’s growth has been phenomenal, with the company doubling revenue, and its customer base, in each of the last four years. Despite that rapid expansion of the business and the cutting-edge nature of its open source and commercial solutions, HashiCorp has often been reticent to accept money from potential investors.

“We understand what we are. We are an infrastructure company,” McJannet told CRN. “Our products are used to support mission-critical apps around the world, so we tend to be conservative in how we run the company, and how we invest in it, how we fundraise.”

HashiCorp has never needed cash to operate, he added, so it only seeks investment when it sees potential to seize a market advantage.

“We saw an opportunity over the last few months,” McJannet said. “As we aspire to play this role for some of the largest companies, and grow our customer base, we have to invest well out in front of them.”

That meant deliberately engaging with mutual funds that are among the world’s largest investors in publicly traded companies—portending the path HashiCorp is likely on.

Franklin Templeton led the round, and T. Rowe Price and Geodesic Capital also participated, along with all existing investors, to impart a valuation on HashiCorp of $5.1 billion.

While there’s no specific IPO plans in the works, the nature of those investors highlights it’s “important for our customers to recognize we see ourselves long-term in the governance of the public markets and are beginning to build our shareholder base in the public markets.”

That timetable will be one the company closely controls, as it doesn’t need a public offering to be a fundraising event, he added.

HashiCorp now plans to ramp investment across its product portfolio in field, engineering and support organizations—the company maintains dedicated teams for each product it operates at scale.

HashiCorp aims to be an “independent, strong partner in multiple product areas in the transition to cloud, which means we are going to invest in a lot of parts of our business,” he said.

That market the company is seeing is horizontal and global, McJannet said.

“When I go to Singapore, they ask me the same questions that they ask me in St. Louis,” the CEO told CRN.

Early in its history, HashiCorp got “pulled into markets internationally” by its customers, he said, and now serves customers globally, with employees strategically distributed across 13 countries. With the latest funding, it will “double-down” on investments in Europe and Asia.

Those accelerations in field investment will drive even more engagements to HashiCorp’s ecosystem of systems integrators.

“Our customers are asking for SIs with expertise in cloud adoption, DevOps and cloud security, and I would expect as we continue to invest aggressively and engage more of the market, it will create a larger need in our SI ecosystem,” McJannet said.

“We’ve invested as heavily as we could in building out an SI channel in every region.”

The startup works closely with all hyper-scale cloud providers. It had the distinction of being named the 2018 Google Cloud Technology Partner of the Year for the Developer Ecosystem, and the Microsoft Azure 2019 Partner of the Year for Open Source Infrastructure and Applications.

As relationships with Google, Microsoft, Amazon Web Services and Alibaba cloud expand, enterprises increasingly seek skills in deploying cloud-native technologies, and systems integrators become an even more important part of the startup’s global business.

“We play a serious role for serious people,” he told CRN. “Our products play an enabling role for them. Especially in the last few weeks.”

With companies around the world shifting to a remote worker model to slow the spread of the coronavirus pandemic, HashiCorp’s technology is proving essential in helping a variety of technology platforms rapidly and securely scale their cloud environments to seamlessly handle the surge in loads.

Last week, as the pandemic gripped the world and brought the operations of many businesses to a halt, HashiCorp saw the most downloads ever of its open source solutions.

“We’ve seen the power of HashiCorp’s toolset, especially Terraform, in our customers’ transformation to Microsoft Azure,” said Jason Rook, senior vice president of business development at Chicago-based HashiCorp partner 10th Magnitude.

Rook said he expects the latest investment to expand functionality and address the complexity of a multi-cloud world, which will only further accelerate customer adoption.

“The genius of their approach is in providing an efficient, secure, and repeatable path from on-premises to the cloud as well as across all clouds,” Rook told CRN.