Grafana Labs Inc., the startup commercializing one of the most popular open-source tools for finding issues in information technology infrastructure, today announced that it has closed a $220 million funding round.

The Series C round gives the startup a valuation of $3 billion. Sequoia Capital and Coatue Management jointly led the investment. They were joined by returning Grafana Labs backers Lightspeed Venture Partners, Lead Edge Capital and GIC.

Grafana Labs maintains Grafana, an open-source software platform that companies use to monitor the health of their IT infrastructure. The Grafana platform detects technical issues such as a sudden drop in the speed of web page loading times. It also lends itself to monitoring other kinds of events: Firms can use the platform to track business-related developments such as changes in store sales.

A key factor behind why Grafana Labs is now valued at a hefty $3 billion is that Grafana is one of the most popular platforms in its category. There are more than 750,000 deployments of the software worldwide that are operated by major enterprises as Intel Corp., Salesforce.com Inc. and PayPal Inc., to name a few users.

One of the reasons for Grafana’s popularity is that it’s relatively easy to use. Usually, companies rely on several different tools to monitor their IT infrastructure, each of which must be set up and maintained separately. Grafana reduces complexity by consolidating features that are normally spread across multiple tools into a single platform. As a result, developers only have to set up and maintain one piece of software instead of several.

IT monitoring applications find technical issues by analyzing large amounts of automatically-generated diagnostics information from a company’s infrastructure. Some tools require users to manually set up a database to store that diagnostics information. Grafana, in contrast, has a built-in system for storing infrastructure records that removes the need to deploy a standalone database and thus simplifies the setup process. 

Grafana’s ability to process all three major types of monitoring data are also a part of its ease of use. The information that companies collect from their IT infrastructure to find technical issues mostly comprises three data types: logs, metrics and traces. In the past, enterprises often had to use separate tools for each, which created complexity. The Grafana platform, with the help of a set of complementary open-source technologies created by Grafana Labs, can analyze all three types of data to reduce the need for multiple tools.

Today’s $220 million round indicates that Grafana Labs’ other investors believe the startup has a big opportunity to monetize the popularity of the platform. As an open-source project, Grafana is free. The startup monetizes it with two paid versions of the platform that provide additional features and as of earlier this year had more than 1,000 customers.

The startup will use its new $220 million in funding to grow its paid offerings’ feature set and customer base. To start, Grafana Labs is expanding the free edition of its Grafana Cloud service, which is a managed cloud-based implementation of Grafana. Users of the free edition will now receive the ability to analyze 50 gigabytes of trace data at no charge in addition to the support for 50 gigabytes of logs and 10,000 metrics that was available before.

Grafana is also expanding its board following the funding round. Two new directors are joining: Sequoia Capital partner Carl Eschenbach, former president and chief operating officer of VMware Inc., and Coatue general partner David Schneider, who was previously ServiceNow Inc.’s president.

“This new investment of capital, as well as the addition of two highly experienced technology executives to our board, will focus us on accelerating product development to support our community’s and customers’ success,” said Grafana Labs co-founder and Chief Executive Officer Raj Dutt.

Grafana Labs could potentially also use the new funding to acquire startups with technology that can advance its product development plans. It has made two startup acquisitions in the past three months alone. Grafana Labs in July bought Load Impact AB, the maker of the popular k6 load testing tool for checking the reliability of Kubernetes deployments, and a few weeks later purchased software project management specialist Pace.dev.

Grafana has raised about $295 million in funding to date. The startup says its new $3 billion valuation is 10 times higher than the valuation it received after a funding round two years ago, which implies rapid revenue growth.

Image: Grafana