After surpassing $100M in ARR, Harness Labs grabs a $150M line of credit
Reading Time: 2 minutesHarness Lab isn’t founder Jyoti Bansal’s first startup. He sold AppDynamics to Cisco for $3.7 billion in 2017, the week it was supposed to go public. His latest venture has raised $425 million, per Crunchbase.
On Tuesday, Harness announced $150 million in debt financing, essentially a line of credit that the company can draw on as needed. It could be the final private financial step before an eventual IPO. It’s worth noting that the company took another round of debt financing of $55 million in 2022.
Harness has built a soup-to-nuts toolset for software development teams that includes a CI/CD pipeline, code repository, developer portal and infrastructure as code support, among other things. The company hinted that it will use the financing to build or buy other pieces for the toolset.
He also says it’s an efficient way to raise capital because they don’t have to give up any equity; this could be a good final raise before the next logical step. ‘We think we can take this loan all the way to an IPO. We don’t need any to raise any more equity. Who knows, we may end up doing it, but we don’t need to, and we can go from here to an IPO without additional investment,’ he said.
The business appears to be well set up for that next big step: It surpassed $100 million in ARR last year, a signal that the company is sustainable and around for the long term. Bansal says that the revenue has continued to accelerate beyond that milestone.
The company recently hired a chief revenue officer, and it has a chief financial officer in place: all signs that the company is thinking ahead to an IPO.
Bansal has set three criteria for being successful: Harness Labs wants substantial revenue, accelerating far beyond the $100 million it hit last year; it wants to be efficient because Wall Street is demanding it now; and it wants to be high growth. If Bansal continues to steer the business with those three goals, he thinks that will eventually lead to going public.
‘An IPO is just a milestone of operating as a company. It’s not as though the IPO is an exit. It’s the first step in becoming a public company,’ he said. ‘So whenever the gates are open, and we are ready, we just want to be in the right financial position, that our business is strong, and that it has all the right elements to it.’
And for Bansal, who sold his previous startup just before going public, being the head of a public company is something he aspires to. ‘That’s the next challenge, which I’m excited about,’ he said.
The $150 million debt line comes from Silicon Valley Bank and Hercules Capital, Inc.
Ref: techcrunch
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