Nginx Raises $20M to Advance Web Server Technology

The lead vendor behind the open-source Nginx Web server is looking to fund its growth for the next 10 years.

Nginx raises money

Nginx Inc., the lead commercial vendor behind the open-source Nginx Web server, today announced that it has raised $20 million in a Series B1 round of funding. The new funding adds to the initial $10 million Nginx Series B that the company raised in October 2013, and brings the company's total capitalization up to $33 million.

According to the November 2014 Web Server Survey from Netcraft, Nginx powers 20 percent of the busiest sites on the Internet. Nginx Inc. provides commercial support for the open-source Nginx Web server as well as selling the commercial Nginx Plus Web server. The Nginx Plus product provides users with additional enterprise features for server deployment.

As to why Nginx is referring to its new round of funding as a Series B1 instead of calling it a Series C, Nginx Inc. CEO Gus Robertson said that it's all about setting expectations. "It's just a naming convention; we never did a seed round. Our first round of financing was labeled as a Series A, but it was more like a seed, and our B round was more like a Series A," Robertson told eWEEK. "Investors tend to think about companies at different levels."

A Series C can often be associated with a company that is planning an IPO.

The focus for Nginx Inc. right now is on growing the business, Robertson said. "We see ourselves at the center of the IT trends of cloud and Internet of things, and with the new funding, it allows us to grow the technology and to scale up our business," Robertson said.

As to why Nginx raised $20 million as opposed to a larger or smaller amount, Roberston noted that the company still has not spent all of its initial Series B $10 million funding yet. He added that the $20 million in new funding is the amount that was determined to be appropriate to help get the company to the next level, to grow the business and the improve the technology.

"We will continue to innovate the open-source Nginx Web server, and we will continue to improve and bring new functionality to Nginx Plus," Robertson said. "We're looking at improving performance even more than we have today, and we're looking at how we can enhance security."

Another key focus for Nginx improvement is in the area of streaming media as online video use continues to grow.

The new funding will also be directed toward helping grow the marketing and sales efforts of Nginx Inc. From a channel perspective, Robertson said that cloud service providers including Amazon and Microsoft's Azure are key partners.

The Nginx Inc. business model is largely built around a recurring revenue model for Web server subscription support. Currently, 85 percent of Nginx Inc.'s revenues come from Web server subscriptions and 15 percent from professional services for implementation and architectural design work, Robertson said.

The open-source Nginx project this year is celebrating its 10th anniversary, and the plan for the next 10 years is all about more growth.

"For the next 10 years, we see the trends of cloud and mobility use continuing to grow," Robertson said. "Traffic to Websites will continue to grow as Web browsers become more intelligent."

Moving forward, Robertson also sees a trend for Web server enablement within applications. Application delivery is increasingly moving from being part of the network to being embedded in application software.

"To us, it doesn't make sense to put HTTP Web functionality in a hardware device; it makes more sense to put it in the application architecture," Robertson said. "We see Nginx becoming a critical part of that."

Sean Michael Kerner is a senior editor at eWEEK and Follow him on Twitter @TechJournalist.

Sean Michael Kerner

Sean Michael Kerner

Sean Michael Kerner is an Internet consultant, strategist, and contributor to several leading IT business web sites.