Spiceworks lands $8 million for its free software

Start-up Spiceworks closes its second round of venture capital funding

Spiceworks garners $8 million in Series B funding to further develop its ad-supported free IT management software.

IT management start-up Spiceworks today announced it had garnered $8 million in a second round of venture capital funding led by Shasta Ventures.

Spiceworks, founded in January 2006, received $5 million in its first round of funding in June 2006 led by Austin Ventures, which also contributed to this more recent round. The company says the additional funds will go toward expanding its software development and support for the 120,000 users that have downloaded its IT Desktop software to date.

Spiceworks IT Desktop is available free for download and is designed to manage networks with up to 250 devices. The software installs on an IT manager's workstation and inventories systems, clients and other IP-based devices through agentless discovery methods using open protocols such as Windows Management Instrumentation and Secure Shell. The application can provide inventory data, monitor the health and status of managed devices, and enable IT managers to keep an eye on their distributed assets at no cost to the user -- with one caveat.

Spiceworks users must be willing to tolerate adware in the management console. By partnering with Google AdSense, Spiceworks is able to garner revenue from clickable ads featured in the console and offer its software free to users. Company executives say the number of downloads proves the company's business model resonates with IT managers.

"It's clear that software business models once thought acceptable only for consumers are now ideal for certain business software applications," says Spiceworks CEO Scott Abel, who previously co-founded management automation software company Motive.

Spiceworks also this week announced that Shasta Ventures co-founder and Managing Director Ravi Mohan and former Dell senior executive John Hamlin have joined the company's board of directors.

"The consumerization of the enterprise is happening all around us -- especially in the small-business market," said Mohan in a Spiceworks press release. "Spiceworks is a next-generation software company that provides free software that solves the needs of an IT administrator. The quality of the product is evidenced by the rapid viral growth in their user base."

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