Harness is not founder Jyoti Bansal’s first startup. He sold AppDynamics to Cisco for $3.7 billion in 2017, the week it was scheduled to go public. His latest enterprise raised $425 millionin response to Crunchbase.
On Tuesday, Harness announced $150 million in debt financing, essentially a line of credit that the company can draw on when needed. This could also be the last private financial step before a possible public offering. It is worth noting that in 2022, the company obtained one other round of debt financing in the amount of USD 55 million.
Harness has created a comprehensive toolkit for development teams that features a CI/CD pipeline, code repository, developer portal, and code infrastructure, among others. The company suggested it could use the funding to build or purchase other pieces of the toolkit.
Bansal says they were looking for alternative ways to lift money and saw debt financing as a way for healthy public firms to access additional capital. “We looked at what is the best way to raise capital, and if you look at a public company, most public companies have access to debt – and that’s what they would raise as a very healthy business,” Bansal told TechCrunch.
He also says that it is an effective solution to raise capital because you do not have to offer up any capital; this might be a good final raise before the next logical step. “We think we will take this loan all the solution to the IPO. We now not need to extend equity capital. Who knows, perhaps we’ll do it will definitely, but it is not obligatory and we will proceed to the initial public offering without additional investments,” he said.
The company appears to be well-positioned for its next big step: ARR exceeded $100 million last 12 months, a signal that the company is sustainable and can be viable for the long run. Bansal says revenues proceed to grow after reaching this milestone.
The company recently hired a chief revenue officer and already has a chief financial officer – all indications are that the company is considering going public.
Bansal has established three criteria for success: Harness wants significant revenues, on pace to far exceed the $100 million it achieved last 12 months; desires to be efficient because Wall Street demands it now; and I need to be tall. He believes that if Bansal continues to run the business with these three goals in mind, it is going to eventually result in a stock market listing.
“The IPO is simply a milestone in the functioning of the company. It’s not like the IPO is the way out. This is the first step towards becoming a public company,” he said. “Whenever the gates are open and we’re ready, we just want to be in the right financial position so that our company is strong and has all the right elements in place.”
And for Bansal, who sold his previous startup just before going public, being the head of a public company is something he aspires to. “This is another challenge I’m excited about,” he said.
The $150 million debt line is from Silicon Valley Bank and Hercules Capital, Inc.