Big news: Australian enterprise software company Atlassian, creators of popular wiki Confluence, project tracking platform Jira and other innovative software, has just raised $60 million from Accel Partners in what Wall Street Journal reports as a ‘growth equity’ round.
Atlassian has been entirely bootstrapped with no external funding to date, making it one of the larger companies in that situation, given its $59 million revenue in the last financial year. The reasons given for the funding round are to fund expansion in Europe and Asia, acquisitions, and to give liquidity to its employees, who all have stock options. Similarly, Microsoft’s CFO at the time of their IPO said that they didn’t need the money but mainly wanted to give their employees a way to participate easily in the company’s success.
My lens on this is that Atlassian are very likely to be eyeing the emerging Enterprise 2.0 (or social) software space. This is currently characterized by convergence, in which companies which have variously started from enterprise wikis, enterprise blogs, community spaces, collaboration platforms, messaging and so on are now building the other pieces of their offering to become broad-based social software platforms that can support all or most of the social needs of a large organization. Companies are tired of cobbling together solutions and are looking for deeper integration. In addition, they want vendors that are highly established – a solid VC funding round gives comfort. Apparently an IPO is on the cards too.
Gartner’s Magic Quadrant for social software shows Atlassian in the Challenger position – it has very strong ability to execute, but lacks the ‘completeness of vision’ required to be in the Leaders quadrant together with Microsoft, IBM, and Jive. Confluence is a great product with extremely broad penetration. Yet it currently offers only a relatively small part of the suite of social software offerings large companies are looking for. With this injection of funds, and after judicious acquisitions, Atlassian will be no doubt on many short lists for large-scale deployments of Enterprise 2.0 software. This is a rapidly growing space and there will be big spending in coming years.
Co-Founder Scott Farquar was quoted in Sydney Morning Herald saying:
“We want to grow it to a billion dollars and be the first Australian software company to do that.”
Every chance of that happening.
DISCLOSURE: Atlassian provided drinks at the TEDxAdvance event last year in San Francisco where I spoke about Future of the Enterprise - thanks guys!