Venture capital investors are becoming increasingly bullish on startups helping businesses test their Web, mobile and desktop apps.
Over the past four quarters, testing startups have raised $162M across 46 deals. Of note, Q1 2014 saw a five-year high in quarterly funding behind a $43M round to mobile app testing platform Applause, led by Goldman Sachs. On a year-over-year basis, VC funding to web and mobile testing startups grew 71% while deal activity jumped by over 87%.
Testing VC Financing Trend – By Stage
As VCs warm up to new testing platforms and technologies, the past two years have seen a proliferation of seed deals in the testing space. In fact, seed deals have captured the majority of venture deals in the over the past two years at 57%. Another 20% of deals have come at the Series A stage. A cross-section of testing startups that raised early stage funding since the start of 2013 are highlighted below – including several backed by prominent VCs including Google Ventures and Andreessen Horowitz.
- Appurify – Automated testing and performance optimization for mobile apps backed by Felicis Ventures, Google Ventures and Foundation Capital
- Kaizen Platform – Crowdsourced A/B testing service backed by Fidelity Growth and GREE Ventures
- Apptimize– Mobile A/B testing backed by Google Ventures, Andreessen Horowitz and Maverick Capital
- Testbirds – Mobile and web app crowdtesting backed by Seventure Partners
- Runscope – Automated testing for APIs and backend platforms backed by Andreessen Horowitz, Lerer Ventures and True Ventures
While early-stage activity makes up over 3/4ths of testing deals over the past eight quarters, average VC deal sizes in the space have risen behind a handful of well-funded companies as highlighted in the chart below. Notable deals in 2013 including Optimizely’s $28M Series B led by Benchmark Capital and Soasta’s $30M Series E from investors including Macquarie Capital, Canaan Partners and ROTH Capital while Applause’s Series E round is responsible for the notable jump in avg. Q1 2014 deal size.