UTest Raises its Largest Round Yet, $13 Million, to Scale Up Crowdsourced Software Testing Community

UTest, which helps big companies crowdsource their software quality assurance (QA) testing to a community of 30,000 freelance testers, said today that it has raised $13 million in Series C financing. It’s one of the largest venture funding rounds ever collected by a crowdsourcing company, and from the size of the round, “you should take it as a validation that their business model is working,” say Sharon Wienbar, managing director at San Mateo, CA-based Scale Venture Partners, which led the round. “These guys have more business than they can handle, and it’s all about scaling now.”

The Southborough, MA-based company, which recently opened a Silicon Valley office, has built a software-as-a-service platform where companies submit their code and say what kind of testing they need, then wait for bug reports from uTest’s global community of testers. Wienbar and uTest CEO Doron Reuveni say demand for the service is exploding, in light of the growing number of companies that have software to test.

“The whole ‘appification’ of software platforms, whether it’s for social platforms like Facebook or mobile platforms like the iPhone or Android or Palm, or even just Web apps, creates a dramatically more complex user-testing matrix for software publishers, which could mean media companies, retailers, enterprise software companies,” says Wienbar. “Anybody who has to interact with consumers needs a service to help with that testing. You can’t cover that whole matrix with your in-house test team.”

UTest’s customers include big names like Google, Microsoft, Intuit, Myspace, and Thomson Reuters, and Reuveni says the startup’s revenues have grown by a factor of 40 over the past two years. But that could be just the beginning—outsourced software testing, after all, is a $10 billion market in the United States alone.

“We want to go faster, we want to go broader, we want to capture more market share, and we want to substantially increase our presence on the West Coast,” Reuveni says. “What we are trying to do is become the hub of all software quality testing worldwide. That is how big we want to take it—into all verticals and all horizontals.

Which takes cash. Reuveni says uTest—which previously raised $2.2 million in a March 2008 Series A round and $5 million in a Series B round just six months later—went to see five different Silicon Valley venture firms about the latest round. “The guys I liked the most were Scale, and we had a term sheet relatively quickly,” he says. Both of the company’s existing Series A and B investors—Longworth Venture Partners and Egan-Managed Capital—also participated in the new funding round.

It probably helped that Wienbar already had her eye on the crowdsourcing sector. “It’s an area where we did substantial research starting in 2008,” she says. “We identified literally 200 companies across dozens of service sectors. There are a handful of companies that are really hitting their stride now, uTest being one of the leaders. They have the right model for delivering something that creates value both for the end user and for the community.”

UTest is recruiting new testers at a rate of 1,000 a month. And it’s earning its community’s loyalty: As I wrote recently, the company’s own testers helped it survived a bookkeeping snafu in which it paid all of its testers twice for their work in the first half of May. Not only was the payment bug first diagnosed by the testers themselves, but 99.5 percent voluntarily returned their overpayments within 48 hours of the glitch.

“These aren’t kids working after school. The vast majority of the testers have either a bachelor’s or a master’s degree in a technical field, and have worked as professional testers,” says Wienbar. “So uTest is bringing to bear the right kind of people to deliver a high-quality service. And they’ve invested a lot in the software layer to make sure that customers’ projects get turned around quickly—which is very important when software development methodology has changed to agile coding, where companies are doing a major release every week.”

UTest will use part of its new round to staff up its Silicon Valley office, whose team of six is set to grow to 15 by the end of the year. “We’re hiring everything from project management to sales to engineering to marketing,” says Matt Johnston, uTest’s vice president of marketing. The company also plans to invest in developing application programming interfaces that allow third parties—even non-customers—to tap into uTest’s crowdsourcing platform and use it to manage their own internal and external QA testing teams.

Compare this story to:

uTest Lands $13 Million For Software Testing Marketplace (TechCrunch)
Software testing startup uTest lands $13M financing (Mass High Tech)

Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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