Puppet Labs pulls the strings for $22 million in cash

Puppet Labs $22 million funding
Credit: iStockphoto

Puppet and its competitors are in a mad dash for growth. The prize? Being the vendor of dominance in the IT automation space.


Puppet Labs is a company I've written about often. There are a couple of reasons for this.

First, its CEO, Luke Kanies, is an easy guy to talk with and can always be relied upon for an interesting perspective and readily consumable soundbite. Secondly, what the company is doing in IT automation is increasingly the key to unlocking enterprise agility.

In the old world, typified by traditional enterprises, IT departments would create an application and rack and stack physical hardware on which to run those applications. Their servers were fixed assets that were there to do one thing: run a particular application for the foreseeable future. As such, they were carefully maintained and managed to ensure application reliability.

In the modern world, typified by web-scale consumer Internet brands, servers are generally virtual assets that come and go at will. Applications scale up and down, come into existence and rapidly die, and the servers upon which those applications run are often virtual boxes created by compartmentalizing a physical server to support a number of different "virtual servers." In this model, servers are expendable and treated as such. Some people characterize these two different approaches as, "pets versus cattle." Traditional IT treats servers as pets, to be coddled and preened; new IT regards servers as cattle, useful for the time being, expendable when no longer required.

Puppet is in the business of IT automation and helps organizations automate the provisioning and deprovisioning of all this virtual infrastructure. The company, along with its generally accepted number one rival, Chef, has grown to scale over the past few years by being seen as the shining light of new IT and, more importantly, by enabling existing and new enterprises to deliver IT in an agile manner.

Puppet is today announcing that it has secured an additional $22 million funding round by way of a credit facility from Silicon Valley Bank. At the same time, Puppet has appointed former Genentech Chief Financial Officer Lou Lavigne to its board of directors and audit committee chair. 

While the additional capital is useful, it is somewhat interesting that this is via a credit facility. That is less usual than the regular venture-backed equity raise and might have people wondering about the approach. That said, Kanies has always been clear about growing his business in ways that are right for him and his shareholders, and not simply to fulfill the usual Silicon Valley norms. The positive side of a credit facility is that it doesn't have an impact on the balance sheet of the company, although some might suggest that it is less of a seal of approval of the company's performance than a traditional equity deal.

Either way, the funding, along with Puppet's intention to greatly expand its Portland, Oregon, headquarters is an indication that the company is heading in the right direction. Something tells me Puppet has a lot of work ahead of it, helping companies move from a pet-preening culture to a cattle-raising one.

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