Tricentis raises $165m in bid for global leadership in automated testing
Insight Venture Partners, the New York-based venture capital firm that specialises in investments in software and internet businesses, has acquired a $165 million majority stake in Tricentis, the Austria and California-based automated software testing specialist.
The series B financing will position Tricentis to take advantage of what it believes will be a dramatic consolidation of the $34 billion software testing services market, said Wolfgang Platz, Tricentis’s chief product officer and the company's founder.
There are no immediate plans for mergers or acquisitions of other companies by Tricentis, Platz told QA Financial. But the expectation must be that it will be on the look-out for deals that add to its market share in different industry verticals. Around 60% of Tricentis's revenues are currently derived from banks and other financial services customers.
“We’re going to see a significant clean-up and consolidation in the [quality assurance and testing] vendor landscape,” Platz said. "With this funding we will certainly be placed to win.” In five years time, Platz predicted, around half of the vendors of testing services will “not be there” as the industry consolidates around those companies that offer the most efficient automation technologies.
Tricentis, whose core testing product is the Tosca Testsuite, currently derives around 60% of its revenues from financial firms and counts Allianz, Deutsche Bank UBS, and Vantiv, the US card and payments company among its customers.
“Our goal is to grow as fast as possible,” he said, "If that requires acquisitions, that might be possible. But we have no immediate, concrete plans.”
The desire of large companies across different industries to transition to DevOps platforms - and from manual to more cost-efficient automated testing - will drive that consolidation among vendors, Platz predicted. "All of our customers need to go digital, and digital translates into DevOps,” he said.
While other IT vendors offer DevOps platforms, Tricentis has a lead in the test automation technologies, including test service virtualization, that will drive efficiencies in software development, Platz said. Tricentis's specialisation will be industry-specific offerings that come with automation packages that will help smooth the transition, he said, by enabling teams of manual testers to apply automation to existing software development lifecycle models.
Financial firms have taken a lead in software automation, but Platz predicts other industries will catch up. The healthcare and life sciences industries in particular will be increasing the amount of automated testing they do, said Platz, when asked which new sectors Tricentis will target for its growth. However, even some of the largest international investment banks are currently automating only around 10% of their testing, he added, and so financial firms are likely to remain the single largest customer group for Tricentis for some time to come.
Insight Venture Partners says it has raised more than $13 billion and invested in more than 250 software, internet and data services businesses. It already has a holding in SmartBear, the US-based testing services company, and a competitor to Tricentis. Insight Managing Director Mike Triplett, who is a long term investor in key infrastructure tech companies, will now join Tricentis’s board of directors.