Harness is not founder Jyoti Bansal’s first startup. It sold AppDynamics to Cisco for $3.7 billion in 2017, the week it was supposed to go public. His latest venture has raised $425 millionper 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 last private financial step before an eventual IPO. It is worth noting that the company took another round of debt financing of $55 million in 2022.
Harness has built a “sup-to-nuts” toolset for software development teams that includes, among other things, a CI/CD pipeline, code repository, developer portal, and infrastructure as code support. The company has hinted that it will use the funding to build or buy other pieces for the toolkit.
Bansal says they were looking at different ways to raise money and saw debt financing as a way for healthy public companies to access additional capital. “We looked at what’s the best way to raise capital, and if you look at a public company, most of the public companies have access to debt — and that’s what they would raise as a very healthy business,” Bansal told TechCrunch.
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 believe we can get this loan in an IPO. We don’t need to raise any more equity. Who knows, we might end up doing it, but we don’t have to, and we can go from here to an IPO without additional investment,” he said.
The business seems set up well for this next big step: It surpassed $100 million in ARR last year, a sign that the company is sustainable for the long term as well. Bansal says revenue has continued to accelerate beyond that milestone.
The company recently hired a chief revenue officer and has a chief financial officer – all indications are that the company is considering an IPO.
Bansal has laid out three criteria for success: Harness wants significant revenue, accelerating well beyond the $100 million it hit last year. It wants to be efficient because Wall Street demands it now. and wants to have high growth. If Bansal continues to steer the business with these three goals, he believes it will eventually lead to going public.
“An IPO is simply a milestone of operating as a company. It’s not like the IPO is an exit. It’s the first step to becoming a public company,” he said. “So whenever the gates are open and we’re ready, we just want to be in the right financial position, that our business is strong and that we have all the right elements.”
And for Bansal, who sold his previous startup shortly before going public, heading a public company is something he aspires to. “That’s the next challenge, which I’m excited about,” he said.
The $150 million debt facility comes from Silicon Valley Bank and Hercules Capital, Inc.
