Vercel Closes Second Funding Round In 8 Months

Illustration of piles of gold coins to represent money

San Francisco-based Vercel closed a $40 million Series B, just eight months after announcing a $21 million Series A in April.

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The new round was led by GV, with participation from new investors Greenoaks Capital, Bedrock Capital and Geodesic Capital in addition to existing investors Accel Partners and CRV.

Vercel’s software development workflow and deployment platform is designed to help frontend developers improve their work environment and therefore increase the performance of sites. The platform was created by the same team that developed the open-source, front-end development web framework Next.js, which Vercel supports.

“We’ve closely tracked Vercel as we believe the future of compute will continue to move to serverless and we favor the Next.js react open-source framework that the company has pioneered and developed,” said Tyson Clark, general partner at GV.

Development during the pandemic

The company has gained traction during the pandemic, as developers have seemingly increased production as digitization has accelerated, said co-founder and CEO Guillermo Rauch. The company has watched active users increase 16 percent month to month and deployment and engagements grow 27 percent month to month, he added.

“We saw dramatic growth during the coronavirus pandemic and decided the time was right to double down,” Rauch said, adding that the company saw significant inbound interest from investors during its Series B raise.

While the company has competition from other startups such as Netlify, Gatsby and Firebase, Rauch said Vercels’s unique relationship framework and focus on the application layer helps differentiate it from others in the market.

Vercel works with more than 4,000 organizations, including AirBnb, HashiCorp and TripAdvisor, Rauch said.

The future

Before co-founding Vercel, Rauch was CTO and co-founder at Cloudup and LearnBoost, which were both acquired in 2013 by Automattic, the parent company of

Rauch said it’s too early to tell the future of Vercel because the space is so new, but he believes it is a unique market.

“We are into this to see how big this can get,” he said. “We think we can be one of the largest software companies around.”

Clark said Vercel is focused on becoming a big company in the space and has its eyes set on being a standalone company for the foreseeable future.

“We believe the growth opportunity in the space is really compelling,” he said.

Illustration: Li-Anne Dias.

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