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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

May 29, 2014 at 4:00 AM

ExtraHop raises $41 million, doubling team

Yes, there’s an extra hop in the step of Jesse Rothstein, chief executive of Seattle-based ExtraHop.

The enterprise analytics company is announcing today that it has raised $41 million to accelerate its product development and international expansion, bringing total funding to $61.6 million.

Rothstein expects the 140-employee,  7-year-old company plans to double its headcount over the next year locally and in new field offices, perhaps in Asia and Latin America.

ExtraHop sells products that companies use to analyze data moving across their networks. Altogether, its customers, including  Morgan Stanley, Microsoft and Concur, use ExtraHop to manage more than 1 million servers, monitor more than 1 trillion transactions a day, and analyze multiple petabytes per day. Rothstein said sales grew 150 percent last year but he declined to provide specifics or discuss whether the company is moving into position for a public offering or being acquired.

“We’re not really focused on exit,” he said. “We’re focused on building a great business and really creating an entirely new category around our capabilities in wire data analytics and the larger IT analytics category.”

ExtraHop is benefiting from “megatrends” in information-technology, where applications are no longer periodically rolled out in a single datacenter, he said. Now applications may be introduced every few days on virtual machines in datacenters around the world.

This surge in complexity and scale is creating opportunities for companies building next-generation tools for managing IT operations, explained Rothstein, who was formerly lead architect at F5.

These trends have led investors to pour money into enterprise startups in general. Last year they put $45 million into Bellevue’s Apptio, $23 million into Liberty Lake’s 2nd Watch and $32 million into Seattle-based Chef.

Investors in ExtraHop’s $41 million round include Technology Crossover Ventures, Madrona Venture Group, Meritech Capital, Isilon co-founder Sujal Patel and others.

Asked where ExtraHop will be in five years, Rothstein said it “can be one of the next great systems companies — not just in Seattle but in the world.”

“We certainly believe that the market opportunity is lage enough that ExtraHop has the potential of being a large independent company,” he said.

ExtraHop cites Gartner research predicting that tech operations analytics is an $18.9 billion market growing by $1.1 billion a year, and will account for 10 percent of spending on IT operations management by 2018.



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