Crowdsourcing app testing start-up uTest Inc. has raised $43 million in its fifth financing round led by Goldman Sachs. Current investors QuestMark Partners, Scale Venture Partners, Longworth Venture Partners, Egan-Managed Capital, and Mesco participated in the round. The financing brings the capital uTest has raised to date to over $80 million. The company is also changing its name to Applause.
uTest, founded in 2007 by CEO Doron Reuveni and VP product management Roy Solomon, is headquartered in Boston and has a development center in Herzliya. Its customers range from small companies to big ones, such as Google Inc. (Nasdaq: GOOG), Microsoft Corporation (Nasdaq: MSFT), Netflix Inc. (Nasdaq: NFLX), and the daily "USA Today. The company works with more than 100,000 freelance app testers worldwide, who test apps for Android, iPad, HTML 5, and other platforms.
The fact that Goldman Sachs is leading the financing round is no less than a declaration of intent about uTest's future. Goldman Sachs is better known as an underwriter of Wall Street IPOs, such as the IPO of Facebook Inc. (Nasdaq: FB), rather than a regular investor. "Goldman Sachs would not have invested in us if they did not consider us as having the potential of an IPO," Reuveni told "Globes". "They are very selective in their investments, investing in 4-5 companies a year. They believe that the companies they invest in will go public within 2-3 years. We're headed in that direction. We'll need two more years to reach an IPO."
Reuveni added, "If that was not our intent, I would not have gone with Goldman Sachs, but with a more traditional investor." As for the possibility that Goldman Sachs will advise uTest on an IPO, he said, "Our agreement does not mention this."
Reuveni says that he has been devoting 15% of his time to meetings with investment bankers and potential investors, including Goldman Sachs. "They came to my office. I loved this attitude, and their representative: how he saw the market, and his work ethic to work with me and the company. When the potential investment came up, I was enthusiastic."
Reuveni says, "I could have raised a lot more, but I set a limit. I didn’t want to take more than $43 million. This is our fifth and last financing round."
uTest will use the proceeds to expand its operations, especially for mobile devices. "The vision has been growing over the years. We're no longer a company engaged solely in testing, but also in the world of apps. We're like an analytics service on how users use apps and how to improve the product, including a complete set of tools and products," says Reuveni.
"We're in an age in which both software and apps are constantly growing. It's not just mobile. It's also apps for smart watches, smart bracelets, and even cars. This is the market we're going after. This is the direction and potential of the company, which we want to turn into a billion-dollar firm."
Commenting on the company's name change to Applause, Reuveni said, "It's the right thing to do to change the name to what we really do, and to connect to the apps world. The uTest name is an important brand, and it will stay as the brand for our community."
uTest will also use the proceeds to expand its business. "We acquired Polish company Apphance 18 months ago for over $1 million, and we want to make more mergers and acquisitions. I expect to acquire at least two companies this year. The Israeli market is also a target for us. We're seeking supplementary companies in the apps sector," says Reuveni.
Published by Globes [online], Israel business news - www.globes-online.com - on January 14, 2014
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