After Exceeding $100 Million ARR, Harness Labs Gets $150 Million Line of Credit

Harness Lab is not founder Jyoti Bansal’s first startup. He sold AppDynamics to Cisco for $3.7 billion in 2017, the week it was set to go public. His latest venture has raised $425 millionaccording to Crunchbase.

On Tuesday, Harness announced $150 million in debt financing, essentially a line of credit that the company can tap if necessary. It could be the last private financial move before an eventual IPO. It is worth noting that the company has closed a new round of debt financing of $55 million in 2022.

Harness has built a complete toolset for software development teams that includes a CI/CD pipeline, code repository, developer portal, and code support infrastructure. The company hinted that it will use the funding to build or purchase other components for the toolset.

Bansal says they were looking at different ways to raise money, and he saw debt financing as a way for healthy public companies to access additional capital. “We looked at what is the best way to raise capital, and if you look at a listed company, most listed companies have access to debt – and that’s what they would raise as a very healthy company,” says Bansal . told JS.

He also says it’s an efficient way to raise capital because they don’t have to give up any equity; this could be a good last raise before the next logical step. “We think we can take this loan to an IPO. We don’t need one to raise even more equity. Who knows, we might end up doing it, but we don’t have to, and we can go from here to an IPO without any additional investment,” he said.

The company appears well prepared for the next big step: it surpassed $100 million in ARR last year, signaling that the company is sustainable and in business for the long term. Bansal says sales have continued to rise after this milestone.

The company recently hired a Chief Revenue Officer and a Chief Financial Officer, all signs that the company is thinking ahead to an IPO.

Bansal has set three criteria for success: Harness Labs wants substantial revenues, which will grow well beyond the $100 million it reached last year; it wants to be efficient because Wall Street now demands it; and it wants to have high growth. If Bansal continues to drive the company with these three objectives, he believes it will eventually lead to an IPO.

“An IPO is just a milestone in operating as a company. It is not the case that the IPO is an exit. It is the first step to becoming a publicly traded company,” he said. “So when the gates are open and we are ready, we just want to be in the right financial position, that our business is strong and that it has all the right elements in place.”

And for Bansal, who sold his previous startup just before going public, being the head of a publicly traded company is something he aspires to. “That’s the next challenge, which I’m excited about,” he said.

The $150 million debt line comes from Silicon Valley Bank and Hercules Capital, Inc.