Coverity™, Inc., the leader in improving
software quality and security, today announced the company has accepted its first
round of outside funding from Foundation Capital and Benchmark Capital. The $22
Million round of financing follows 5 consecutive years of cash flow positive growth for
Coverity, during which time the company was successfully bootstrapped by product
sales. Coverity will use the funds to extend sales and marketing reach, and to expand
its product portfolio through both acquisition and accelerated internal research and
development efforts. The company today also announced a new board of directors that
includes a number of senior executives from successful development and testing
companies such as Mercury Interactive, Cadence and Pure Software.
“It is a rare opportunity to close an initial round of funding with an enterprise software
company that’s been cash flow positive for half a decade and boasts more than 400
customers,” said Tony Zingale, former CEO of Mercury Interactive and new Coverity
board member. “Previously, Mercury created a billion dollar business helping IT quality
assurance teams validate and monitor the performance of production IT systems.
Coverity’s opportunity is to tackle the broader issue of software integrity but to address it
on the developer’s desktop when problems cost an order of magnitude less to correct.”
Coverity’s expanded product portfolio will allow the company to establish a new
presence in targeted segments of the market for Application Lifecycle Management
tools. According to a 2007 Gartner report on Application Development and Project and
Portfolio Management Software, the worldwide market for these tools is forecast to grow
from $7.2 billion in 2006 to more than $9.3 billion in 2011.1
“The process of software development today is too manual and ad hoc to succeed in
the face of escalating code complexity due to outsourcing, multi-threaded applications,
aging legacy code and a host of other factors. We believe this increasing complexity will
require a new toolset on every developer’s desktop within the next five years,” said Seth
Hallem, CEO of Coverity. “The infusion of capital and veteran leadership through our
expanded board will allow Coverity to bring new products to market that deliver an
integrated approach to designing and developing robust, secure software applications
as we continue to press our advantage in static analysis.”
Coverity will use this round of investment for acquisitions, internal product development,
further expansion into international markets and additional growth for its U.S. sales
force to help meet demand for Coverity Prevent™, the company’s industry-leading static
analysis solution. Coverity Prevent is now used by hundreds of thousands of
developers, as adoption of the product has more than tripled in the U.S., Europe and
Asia over the past 2 years.
“In too many instances today, the software development process remains plagued with
inefficiency because software integrity issues are addressed too late in the development
lifecycle. Current industry trends are compounding the impact of these inefficiencies,
including the globally sourced work force, the expanding scope of today’s software
applications, and the networked environment that has driven the emerging security
threat,” said Theresa Lanowitz, founder of Voke, a technology analyst firm. “Because of
its patented Software DNA Map technology, Coverity has a unique market opportunity
to integrate emerging technologies into a unified toolset. This approach to software
integrity will deliver greater value by attacking quality and security issues in the design
and development phases of the application lifecycle.”
Originally incorporated in 2002, Coverity’s top five senior executives possess a
combined 22 years of experience with the company. In conjunction with this investment,
Coverity’s boardroom will now benefit from the counsel of:
- Tony Zingale – Most recently, Mr. Zingale served as President and CEO of
Mercury Interactive, one of the largest software testing companies in the world.
By leveraging Mercury’s BTO strategy he successfully grew the company to
more than $1B in annual sales, then engineered a $5 Billion merger with HP in
2006. Prior to Mercury, Mr. Zingale was President and CEO of Clarify, which was
acquired by Nortel Networks in 2000. Mr. Zingale brings more than 30 years of
experience building profitable, high growth IT companies to Coverity.
- Aki Fujimura – Mr. Fujimura is Chairman/CEO of D2S, Inc. Previously, Mr.
Fujimura has served as CTO at Cadence Design Systems. He returned to
Cadence for a second time through the acquisition of Simplex Solutions, where
he was President/COO. Prior to Simplex, Mr. Fujimura was an inside board
member and VP at Pure Software. Both Simplex and Pure executed initial public
offerings during his tenure.
- Bruce Dunlevie, Benchmark Capital – Mr. Dunlevie has 20 years experience as a
venture capital investor. During this time, Mr. Dunlevie has invested across a
variety of industry sectors, and has direct investment experience in the software
quality arena following his success with Pure Software, Rational Software, and
Catapulse Inc. Prior to Benchmark, Mr. Dunlevie spent six years as a general
partner with Merrill, Pickard, Anderson & Eyre (MPAE).
- Paul Holland, Foundation Capital – Mr. Holland has spent a significant portion of
his career in the field of software quality. An early employee of Pure Software,
Mr. Holland managed all European business for Pure and was instrumental in
managing three acquisitions, including the tool vendor Atria. Mr. Holland has
helped take two venture-funded software start-ups, Kana Communications
(KANA), and Pure Software (RATL), public. Prior to Foundation Capital, Paul was
senior vice president of worldwide sales at Kana Communications.
- Mike Schuh, Foundation Capital – Mr. Schuh was previously CEO at Intrinsa, a
software quality tool vendor which was acquired by Microsoft. Prior to joining
Foundation Capital in 1998, Mr. Schuh served as vice president of sales at a
number of highly successful technical software companies including Clarify,
Cadence Design Systems and Computervision.
For more information on Coverity, please visit: www.coverity.com