GroundWork Open Source Solutions Raises $8.5M Series B

By Hope Glassberg

3/30/2005

GroundWork Open Source Solutions Inc., a provider of open source-based network monitoring software, has raised an $8.5 million Series B round.

New investor Mayfield led the round with participation from previous investor Canaan Partners. As a result of the financing, Mayfield Managing Director Robin Vasan will join GroundWork's board.

GroundWork previously raised a $3 million Series A in February 2004.

Chief Executive Robert Fanini said that the valuation of the company more than tripled since its last round. He explained the uptick in valuation as a function of increasing acceptance among businesses of open source-based applications.

"Last year we ended the year with 35-plus customers and they were significant company names. We also showed we could easily replace [Hewlett-Packard Co.'s] OpenView and the monitoring function it provides," Fanini said of his software's capability against competitor HP's network products. In terms of other competitive advantages, Fanini cited GroundWork software's lower cost.

GroundWork will use proceeds from funding to develop channel partnerships throughout the U.S. and Europe, particularly in Germany and England, which Fanini said have been particularly strong adopters of open source-based software.

The company will also use new capital for software development. Currently, the company sells one application, GroundWork Monitor, which enables business to monitor network availability and performance via a Web interface and automatically alerts IT staff via pager, e-mail and phone about problems. Eventually, GroundWork will also offer IT dashboard and IT configuration management applications.

In the near term, capital will be used for increasing the ease of software installation and for tailoring software packages for systems integrators and resellers targeting the small to medium business market.

Currently, GroundWork, which began shipping its product in the beginning of 2004, has around 50 customers, including Ariba Inc., Assurant Inc., Genencor International Inc. and Coremetrics Inc.

On average, the software, including a year's worth of services and support, costs $40,000. Subsequent yearly maintenance fees generally cost between $5,000 and $10,000 depending on the size of deployment.

GroundWork is based in Emeryville, Calif., and has 28 employees.