Vancouver-based Zenhub has secured $10 million CAD in Series A financing led by Yaletown Partners to fuel its expansion beyond GitHub, as the startup looks to make software development more collaborative.
Zenhub’s project management and collaboration platform allows thousands of software teams to connect with non-technical people at organizations ranging from Dapper Labs to Adobe and NASA. To date, the startup has been reliant on software development hosting service GitHub as its primary point of integration.
But after hearing from clients that non-technical employees wanted to connect with software teams without using GitHub given cost and security considerations, Zenhub co-founder Aaron Upright realized the need to evolve into more than just a GitHub plug-in.
Zenhub aims to evolve from just a GitHub plug-in into a more broadly accessible platform for software project management.
ZenHub plans to use its Series A capital to support its transition into a more broadly accessible platform for software project management, beginning with today’s launch of its new Zenhub Issues product, which the company has been working on for the better part of a year.
“What we’re solving for here … is the ability for developers and non-technical stakeholders inside or outside the organization to come together and collaborate with one central space,” Upright told BetaKit in an interview.
According to Upright, Zenhub is looking to do this in a way that works for developers, without requiring non-technical team members to actually use GitHub and be given access to the code.
Zenhub’s all-equity Series A round closed earlier this month. The Yaletown-led financing also saw support from fellow new investor BMO Capital Partners, which typically invests at the Series B stage, but Upright said has begun to lean into the developer tools space. Yaletown and BMO were joined by existing Zenhub backer BDC Capital. Upright declined to disclose what valuation the company’s latest funding gives Zenhub. This capital brings Zenhub’s total funding to date to $15.9 million CAD.
Speaking to Yaletown’s involvement in Zenhub’s Series A round, Upright said the startup wanted to bring in a new, experienced investor to the table. Upright described Yaletown as an attractive addition to Zenhub’s cap table given the Vancouver-based investment firm’s domain experience in the software space supporting similar companies like Vancouver’s Tasktop.
As part of the round, Yaletown principal Michael Sfalcin is joining Zenhub’s board of directors. Sfalcin told BetaKit that the firm was attracted to Zenhub for a few key reasons, including the startup’s commitment to putting developers first and the fact that Zenhub drives programming efficiency for customers.
“ZenHub is at an inflection point, moving from plug-in to platform where the information/insights housed in a company’s code repository can safely and securely be viewed by others in the organization to facilitate orchestration and coordination across the broader organization,” said Sfalcin.
Zenhub was founded in 2013 under Axiom Zen, a Vancouver-based innovation studio whose portfolio also includes Dapper Labs. In 2015, ZenHub separated from Axiom Zen to become an independent company, bootstrapping for years before raising a $5.9 million seed round in early 2021 that was co-led by BDC Capital and Ripple Ventures, with support from Inovia Capital.
Built with the ethos of bringing the rest of any given company to where developers are working, Zenhub enables software development teams and other stakeholders to plan, track, and prioritize their work through its project management and collaboration platform.
As Zenhub CEO Tyler Gaffney noted, “software development is increasingly becoming a team sport.” Despite this trend, Gaffney said many teams remain siloed. “The driving force behind our platform vision is to break down these silos and provide a solution that every stakeholder, whether internal or external, can rely on to understand the progress of software projects.”
Zenhub’s biggest competitor today is software giant Atlassian’s Jira product. Compared to Atlassian, Upright views Zenhub’s connection with GitHub as a differentiator. “That integration that we have with source code is really really powerful,” he added.
But Upright said there were some problems with Zenhub’s previous approach—namely, that allowing non-technical folks to access codebase through GitHub is expensive, non-intuitive, and carries security risks. Zenhub aims to address these issues by making it possible for non-software developers to collaborate and review software project progress without forcing them to tap into GitHub.
In the past, Zenhub faced difficulty fundraising for its seed round given the company’s capital-efficient approach to growth. “We’ve had, traditionally, a hard time raising capital, because Zenhub has taken a very different outlook on how we’ve grown our business,” he added. “We’ve always been focused on sustainable, profitable growth over just growth at all costs.”
Sfalcin believes Zenhub is “well-situated to stick handle through an economic correction.”
As market conditions deteriorated last year amid rising inflation and interest rates, investor interest shifted away from fast-growing, cash-burning companies. According to Upright, Zenhub became more attractive to investors during Series A conversations. As Sfalcin noted, “Management’s focus on building a resilient company is proving to be advantageous in today’s market conditions.”
As a software business that sells to other software businesses, Upright acknowledged that economic headwinds could have an impact on Zenhub, noting that the company has factored this into its strategy moving forward. In light of these conditions, Zenhub has focused less on new customer acquisition and more on client retention and driving growth within its existing customer base.
On the hiring front, Upright said Zenhub has remained mindful of this environment and sought to avoid overextending its business. “We’ve done small reductions here and there over the life of the business … But in terms of a large layoff, I think it’s been something we’ve largely been able to avoid for now,” he added.
For his part, Sfalcin believes Zenhub is “well-situated to stick handle through an economic correction” given the company’s balance sheet and “prudent” approach to spending.
Feature image courtesy Zenhub.