Austin’s Phunware Plans Aggressive Global Expansion with New Funds
Five years after its founding in the depths of the Great Recession, Phunware has done more than survive. Its mobile apps are now spread so wide that founder and CEO Alan Knitowski says the company’s software has been a part of 1 trillion transactions over mobile devices worldwide.
And that was before a $26.2 million fundraise last week, more than half of the total investment received by the company. Now, the Austin, TX-based software firm is poised to embark on its largest expansion yet.
“The biggest thing has been the five billion phones getting replaced with smartphones, and then the tablet market came around,” Knitowski told me in a recent interview. “This is going beyond mobile smartphones, tablets, and wearables to include television, car infotainment systems, and digital signage.”
Phunware develops mobile apps for multinational corporations such as NASCAR, Jawbone, E! Entertainment, ESPN, and Qualcomm (NASDAQ: QCOM). These companies use what Phunware calls its “Mobile as a Service” platform to engage with consumers in more than 190 countries and in more than 10 languages.
Knitowski cites figures from Cisco predicting that this market will reach 50 billion connected devices by 2020. To keep up, Phunware is actively seeking acquisition targets along with keeping an eye on taking the five-year-old company public, perhaps within a year, Knitowski says.
But first Knitowski says the company will likely make two acquisitions this year. In particular, he says he is eyeing companies with compatible technologies that recently raised equity financing of their own but have not been able to grow enough to attract additional rounds of capital.
“The result is a no-man’s land,” he says. “But it creates some opportunities to buy and get ahold of great talent and technology.”
Phunware plans to expand in both Europe and Asia through acquisitions while it increases its footprint domestically with new offices in New York, San Jose, Chicago, and Miami. The new funding will go toward hiring additional sales and marketing staff, in addition to paying for platform expansion and improvements, Knitowski says.
Among Phunware’s new investors this latest round is Cisco Systems, the San Jose giant that last month announced it has created a $100 million fund to invest in early stage startups focusing on the “Internet of Everything” space.
In 2013, Phunware had $22 million in revenue and Knitowski says he expects that number to more than double that to reach $50 million this year. Knitowski, a former U.S. Army Ranger, founded the company in 2009 and previously sold two software companies.
Now, he’s thinking even bigger, taking preliminary steps to prepare the company for an IPO, including hiring Ernst & Young to do requisite audits. “The real question is what size do you have to be to file,” Knitowski says.
The IPO earlier this month of the cloud-based healthtech company Castlight, though, could indicate that bigger is not necessarily better when it comes to what Wall Street wants. “[Castlight] only had $13 million in revenue and now have a couple billion in market cap on that IPO,” he says.