GitHub Targets Enterprise, Reconsiders Venture Capital Stance with $100 Million Funding Influx

3 minute read
Josette Rigsby avatar

Thumbnail image for gitLog.png
It seems the team at popular source code repository andcollaboration site GitHub have had a change of heart. For years, GitHubrefused to accept any venture capital, but now that it has its sights set onthe enterprise, those piles of venture capital dollars are looking pretty good.

Code, Collaboration and Capital

GitHub was launched in 2008 to provide developers a place to share code and collaborate. The company has been successful by all measures, and is now about to receive a sizable infusion of cash in its first round of venture funding ever.

Silicon Valley venture capital firm Andreessen-Horowitz, which was started by Netscape founder Marc Andreessen, has a agreed to invest US$ 100 million in GitHub. Andreessen-Horowitz is well known for its ability to pick startups that eventually become wildly successful; its previous investments have included Skype, Twitter and Facebook. So it is not too surprising that it eyed Github.

However, it is a bit surprising that GitHub chose to take the cash after four years of refusing to accept a single cent of venture capital, because it didn’t want to become distracted from pleasing its users. According to Tom Preston-Warner, co-founder of GitHub, the company has been searching for the right venture partner, and Andreessen-Horowitz was the right fit for the future of GitHub.

GitHub has done pretty well on its own without external investment. The site has managed to attract 1.7 million software developers. Analysts and industry watchers estimate the company’s value at around US$ 750 million. GitHub grew quickly because of its focus on developers instead of the underlying repositories, which have traditionally been less than user friendly.

Learning Opportunities

The company has mostly focused on its web-based solution, which is well established. Now GitHub is increasing attention on its enterprise, on-premises solution. Interestingly, this is the exactly the opposite of what most source control companies that began as locally deployed solutions are doing. Warner has bigger ambitions than just source control. He wants to transform the nature of development. He plans to use the funding for hiring additional staff, expanding to new platforms, enhancing tooling and, of course, increasing GitHub's enterprise presence.

What’s Next

GitHub's new stance on funding is necessary to compete in the enterprise space. Vendors like IBM with its Rational family and Microsoft with Team Foundation Server and open source players like Subversion are well established. GitHub now has plenty of cash, but if the company is going to succeed in the enterprise, they will need to build a strong professional services organization. The underlying open source Git technology that GitHub is built on is difficult for some developers to grasp. Some organizations aren’t even executing traditional source code management properly yet, and they don’t have the in house expertise to deploy or manage a Git-based solution. 

GitHub may go the way of CollabNet that provides value added solutions and support for open source control solution Subversion or Atlassion that offers tools like Jira, Confluence and Crucible to improve developer collaboration and productivity. Devops is becoming a popular topic for organizations seeking to improve collaboration and consistency in their development to deployment cycle.

However, many companies are already struggling to determine how to integrate multiple disparate socially enabled collaboration solutions; adding one for developers will make the problem worse. The team at GitHub did figure out how to make developers more social, so I'm sure they will figure out their place in the enterprise.