Rally Software Development Co., an eight-year-old company whose technology helps automate Agile software development, has raised $16.85 million in its third round of funding and brought on Mohr Davidow Ventures as a new backer.
For Rally, the funding follows rounds of $8 million and $4.5 million, in 2006 and 2005, respectively, from backers including Vista Ventures, Boulder Ventures and Mobius Venture Capital.
MDV, which led the latest funding round, says it broke with its usual pattern of pursuing earlier-stage deals because of the significant stake it was able to capture, as well as the long-term potential it saw for Rally.
"The Agile methodology has gone from something that almost no one had heard of five or six years ago to something that is growing like wild fire today," MDV partner
Bryan Stolle (pictured) says. "This is a big macro trend."
After long being frustrated with the traditional, often inefficient ways of developing software, growing numbers of customers are discovering technologies like Rally's, Stolle adds.
Rally says it doubled its subscription revenue last year, the third consecutive year it has done so, and increased its subscriber base by 50%. The company also cites one recent third-party study that found its technology helped customers achieve development cycles that were almost three times faster than the industry average with far fewer defects. If true, that's quite an achievement.
The Agile process on which Rally's technology is based emerged as a grassroots movement to develop software by breaking it into a series of small tasks, with individual coders or programmer teams focused on short-term projects where they could quickly identify and correct potential problems without significantly delaying the whole process.
With that shift came additional requirements to manage all the moving parts. Rally's technology aims to manage all these smaller projects in a way that teams can work discetely and better prioritize features and requests from customers, while also collaborating with others so that they can shorten development cycles and minimize risk.
Unlike some of the other technologies designed to manage the software development process, Rally says that its technology works without imposing a lot of additional requirements on its end users. Stolle says that most of the company's competitors are other relatively small startup companies.
Rally said it plans to use the additional funding to accelerate its growth and expand into Boston and Silicon Valley.
-- Andrea Orr
Continue reading below
