Network observability startup Kentik lands $40M

Kentik, a network observability provider, today announced that it raised $40 million in a series C funding led by Third Point Ventures with participation from August Capital, Tahoma Ventures, DCVC, Engineering Capital, Vistara Growth, Golub Capital, Gaingels, and Delta-v Capital. The funds bring the company’s total funding to $102 million, which cofounder and CEO Avi Freedman said will enable Kentik to make further investments in its platform.

Managing and running cloud apps is an increasingly complex undertaking in the enterprise. In a recent survey, VMWare found that 86% of engineers believe that apps are significantly more complex than just five years ago, with 84% reporting using hundreds to thousands of compute instances across a single organization. Despite this, only half of all companies are implementing observability for their networks and systems, according to a report by New Relic — in part because of cost concerns.

San Francisco, California-based Kentik, which was founded in 2014 by Freedman, Dan Ellis, Ian Applegate, Ian Pye, and Justin Biegel, analyzes network, cloud, host and container flow, and internet routing performance to generate summaries. It manages digital experiences based on actual traffic, testing latency-sensitive automation, media, gaming, and other apps as frequently as every second.

“Kentik was founded by network and service operators and developers who spent much of their professional lives designing and running large-scale networks … Major web companies, enterprises, and service providers told our founders that the analytics available to cloud-scale companies were sadly lacking in the commercial market, particularly around internet visibility and modern and cloud-native architectures,” Freedman told VentureBeat via email. “The team founded Kentik to create what they always wanted: a network observability solution that’s scalable, powerful, easy to use, and affordable.”

Observability service

According to Gartner, observability is the evolution of monitoring into a process that offers insight into business apps, speeds innovation, and enhances customer experiences. Interest in the technology continues to grow as enterprises realize the business value of intelligent monitoring. According to one estimate, the cloud monitoring market alone will reach $1.97 billion in worth by 2022, up from $821 million in 2017.

Kentik performs tests on networks, containers, and hosts and alerts customers to potential performance issues. Using the platform, engineers can zoom into specific tests and learn the details of traffic paths to narrow down the source of a problem. Kentik also helps to ensure DNS and web servers remain up to date so that websites and web-based apps are always available. Companies get metrics showing server availability, resolution time, and returned results, including IP addresses and records.

“With Kentik, you can see real-time performance of networks and applications side-by-side, pinpointing network issues, or where in the app stack problems are occurring. [You can also] automate testing and debug performance of critical internal and SaaS applications to keep ecommerce up and employees productive,” Freedman continued. “[Customers] get notified about DDoS attacks with quick pivoting for explorations, and control-plane integrations to signal and stop the attacks. [In addition, they can] audit and optimize network spend across cloud networks, service provider bills, and internal network links.”

Kentik’s recently launched managed service, Kentik Cloud, allows users to create charts of custom queries with curated results to see the total picture in a single view. It also provides a map of virtual private networks as well as topologies including gateways and interconnects in the cloud, between clouds, and on-premises.

In August, Kentik launched Kentik Labs, a hub aimed at helping developers reduce their mean time to recovery — the amount of time it takes to recover when a problem occurs — by providing open source network observability tools to rule networks in or out as the issue. “Whether the problem is the application or the network, Kentik Labs offers tools to focus your efforts at the right layer with the right team,” Kentik chief scientist Pye said at the time. “In addition, branching out into open-source technology will allow us to participate in adjacent communities and define the future of observability.”

Kentik’s more than 300 customers and thousands of users span digital businesses, corporate IT, and service providers including IBM, Box, and Zoom. The company competes with Datadog, Netscout, Riverbed, OpsCruise, and Sosivio, as well as app observability platforms DeepFactor and Lightrun, among others. Kentik has 135 employees and expects to have nearly 200 by the end of the year.

“Growth has accelerated during the pandemic, as enterprises become more network and internet dependent for core operations, and as we’ve released new integrated products to test performance and provide cloud visibility. We aren’t disclosing revenue, but we will add double-digit millions of new business this year,” Freedman said. “Our gross margin is over 85% and we have been in the more than 80% range for years due to our own big data … backend and limited use of public cloud. We were more conservative during the beginning of the pandemic, and burned less than $5 million in 18 months, but are massively increasing our investment across the business now.”