Sequoia Leads $40 Million Round for Docker As App Platform Takes Off

Wowed by developer enthusiasm for Docker Inc., Sequoia Capital has led a pre-emptive $40 million round to help the startup scale its technology, which creates and runs distributed applications.

Docker Chief Executive Ben Golub said the startup just this month began spending the $15 million it raised in January, and did not need the fresh funding. The San Francisco-based company, formerly known as Dotcloud Inc., pivoted more than a year ago from providing its platform as a service to app developers to providing a way to deliver applications in a standardized “container” method that reduces both complexity and deployment time.

Developers swarmed the open source platform this summer, with downloads spiking from three million in June to more than 21 million today, according to the company.

“We started to see valuation numbers that were so high, we thought it made sense to do something now,” Mr. Golub said. “We are really pleased that among our options was Sequoia. “

Valuation for the two-year-old startup was around $400 million, VentureWire learned.

Although a number of enterprises, including Gilt Groupe Inc., New Relic Inc. and Yelp Inc. are using the platform, that doesn’t necessarily translate into revenue for Docker. Mr. Golub said Docker has been experimenting with revenue models for a few months. It charges for commercial-level support for services like sending patches, and for a set of enhanced developer tools, along with hosting, storage and on-premise management and monitoring.

Sequoia Capital Partner Bill Coughran said he began talking with Docker a few months ago. He said the team and the technology, which standardizes the way applications are delivered across multiple infrastructures and devices, impressed him.

“We wanted to bring our expertise to Docker and make sure they got enough capital to play this out,” Mr. Coughran said

Although developer enthusiasm for the technology is a great sign, he said it also comes with the risk of those developers overselling it to their chief information officers, he said.

“I’m worried that CIOs think it’s the solution for everything,” he said. “The company needs to continue to build out what they have.”

To that end, the funding will be used for engineering, partner-driven sales and marketing, and continuing to build out both the open source community and commercial offerings.

Existing investors Benchmark Capital, Greylock Partners, Insight Ventures, Trinity Ventures and Jerry Yangalso participated in the Series C round.

The 55-person company previously raised $25.8 million.

credits to: @zettewil