Appsmith, which provides open source software that helps companies quickly build internal applications, announced an $8 million Series A round of funding this morning.
Unlike some upstart tech companies that we have seen in the internal application market, Appsmith doesn't sport a no- or low-code approach. Instead, Appsmith targets traditional developers with its service, which provides user-interface components that can be connected to business data sources. Those data-infused interface modules can be combined to build calendars, dashboards and other apps.
Before its Series A round of funding, Appsmith had raised $2.5 million. Canaan led the funding event. Accel and Bessemer participated, among other investors.
Asked why the startup selected that particular lead investor, co-founder and CEO Abhishek Nayak told TechCrunch that his company had been in touch with Canaan's Joydeep Bhattacharyya since its early days and that the investor had experience with internal apps at Microsoft.
Why did Appsmith decide to raise capital now? Per Nayak, rising usage of its service and a desire to build out its platform to support more use cases -- things like mobile -- were the impetus.
Appsmith doesn't offer a paid product today. But as it currently offers a hosted version of its open source code, it isn't hard to see where it could turn on monetization. Enterprise-specific features would be another obvious method of generating revenue in time.
Why open source?
There has been a trend of startups that build open source technologies raising capital in recent quarters. Appsmith fits neatly into the group.
But the why is more interesting. The company told TechCrunch that its co-founders (Nayak and Nikhil Nandagopal) want Appsmith tech to become part of their customers' technology stack, and that open source code is the way to achieve the goal. The logic there is simple: Open source code is at once less at-risk to the vicissitudes of startup viability and also easy to dig into. Good luck getting similar visibility into proprietary code.
Today, Appsmith's open source project has over 100 external contributors.
The Appsmith team stressed to TechCrunch that feedback from the open source community is useful to making development decisions. And the startup said that by offering a version of its service for free through open source channels, it can provide a service to public-good companies like nonprofits, which might not eventually become paying customers.
Speaking of which, who are the company's future customers?
Who is Appsmith for?
In the startup's view, its open source software is a good fit for smaller companies and developers. Its paid products will fit more neatly into midsize and larger companies once they are rolled out.
We'll have eyes on how Appsmith tackles monetization and customer segmentation, two areas of open source business model formation that we find fascinating. Not only because it's an interesting academic question in the case of the startup itself, but also because we want to better understand how the next generation of open source upstarts decides how to make money. Their choices will set the standard for the next cohort of companies building code in an open manner.
Appsmith has lots of competition in the market, with each rival company taking a different tack to the internal application issue. In brief, companies of every shape and size need internal software, and building it is at once tedious, often thankless and unexciting. So, methods that can short-circuit the process of building internal tooling are in demand.
Stacker, for example, wants to help non-developers build apps from spreadsheets. Unqork wants to help enterprise customers build no-code internal apps. UiFlow as well. The list goes on.
We'll check back in with Appsmith when it turns on paid products, an event that it anticipates will occur before the end of Q1 2022. For now, the startup is flush and working in a growing market. Let's see what it can get done with its new capital.