In a big year for open source, investors anoint HashiCorp as the next start-up to watch

Key Points
  • IVP leads the funding round.
  • Google and Microsoft employees actively contribute to HashiCorp's tools.
HashiCorp employees at the start-up's HashiConf conference in San Francisco in October 2018.

It's been a big year for open-source software. Microsoft bought GitHub. IBM bought Red Hat. Elastic went public. Cloudera and Hortonworks merged.

Now another open-source company is getting a big vote of confidence. Start-up HashiCorp announced Thursday that investors have joined in on $100 million funding round valuing the company at $1.9 billion.

HashiCorp — sometimes referred to informally as Hashi, Japanese for "bridge" and a reference to founder and chief technology officer Mitchell Hashimoto — isn't public, and it's not a household name. But the company has been gaining traction. The open-source tools HashiCorp maintains, with unconventional names like Vagrant, Consul and Terraform, have been downloaded more than 45 million times in the past 12 months, up from 22 million the year before.

"Hashi is a good bet," John Mitchell, chief architect for platform at SAP's Ariba business, told CNBC. While a few dozen people inside Ariba — not to mention other parts of SAP — actively use the HashiCorp tools, Mitchell said a great many more people use them indirectly as they deploy software onto public clouds like Amazon Web Services or in SAP's own data centers.

HashiCorp, founded in 2012 and based in San Francisco, has 330 employees and hundreds of customers, including Adobe, Barclays and Walmart's Jet.com. As adoption of HashiCorp tools increases inside companies, they tend to reach out to HashiCorp to start a business relationship, rather than the other way around, CEO Dave McJannet said.

"We strongly believe the different cloud providers have different value propositions," McJannet said. And many companies will end up using more than just one of the big clouds, he said. HashiCorp's Terraform system fits in with that approach because it provides a way to procure the computing resources that will be needed for applications in multiple clouds.

HashiCorp works with the cloud providers to ensure that Terraform can take advantage of their latest capabilities. Google and Microsoft have full-time employees who are dedicated to contributing to the HashiCorp tools, a spokeswoman said.

When it comes to competition, McJannet said some companies offer more traditional ways to solve the same problems HashiCorp is trying to solve. But HashiCorp is younger and smaller and now will be staffing up in many departments, including customer success.

"I've never seen a market move this quickly," said McJannet, who has previously worked at Microsoft and VMware.

IVP, which invested in GitHub and MySQL, among others, led the round in HashiCorp, which has now raised $174 million. Other investors that participated in the new round include Bessemer Venture Partners, GGV Capital, Mayfield Fund, Redpoint Ventures and True Ventures.

This is best way for open source and our company to achieve full potential, says Red Hat CEO
This is best way for open source and our company to achieve full potential, says Red Hat CEO