Developer startup Honeycomb, founded by ex-Facebookers, raises $20 millionas growth surges

<p><img src="https://static4.businessinsider.com/image/5c9ce5c016c95822b8323095-2400/dsc3041edited.jpg" border="0" alt="DSC_3041_edited" data-mce-source="Honeycomb" data-mce-caption="Honeycomb cofounders Christine Yen and Charity Majors"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Honeycomb, a startup that builds observability tools to help engineers better understand their code, has raised $20 million in fresh funding on the heels of "tremendous growth" in the past year.</p><p>"The problem we're solving hasn't gone away," cofounder and CEO Christine Yen told Insider. "If anything, COVID only accelerated the fact that the world is moving online."</p><p>As the pandemic spurred businesses all over the world to work remote,&nbsp;<a href="https://www.businessinsider.com/former-facebook-employees-enterprise-startups-2019-3">Honeycomb</a> on Tuesday, <a href="https://www.businessinsider.com/17-devops-startups-to-thrive-2020-venture-capitalists-2020-3">Honeycomb</a> announced a $20 million Series B led by existing investor e.ventures Growth, with participation from new investor Industry Ventures, and existing investors Storm Ventures, Scale Ventures Partners, NextWorld Capital and Merian Ventures. It has raised a total of $46.9 million, although it declined to share its new valuation.&nbsp;</p><p>Yen and cofounder Charity Majors founded Honeycomb in 2016. They had both previously worked at Facebook and aimed to build a product similar to a tool they used there called Scuba, which helped developers debug, monitor, and analyze their code.&nbsp;</p><p>"We saw Scuba change how people actually interacted with data, how people thought about their software," Yen said. While building Honeycomb, they stayed focused on the mantra that their product, too, could transform how companies thought about the inner-workings of their software: "Underlying and grounding us in the face of all the startup ups-and-downs was this unshakable faith that there's something here."</p><p><strong><em>Read more: </em></strong><a href="https://www.businessinsider.com/honeycomb-ex-facebook-employees-launches-new-pricing-plan-2020-5"><em>Honeycomb, founded by ex-Facebookers to help developers understand the inner-workings of their code, is completely shaking up its pricingincluding by making it completely free for some users</em></a></p><p>Honeycomb announced a <a href="https://www.businessinsider.com/honeycomb-ex-facebook-employees-launches-new-pricing-plan-2020-5">new pricing scheme</a> last May to include a free plan and two paid plans where customers are charged for usage instead of storage. Q3 was the first full quarter since that pricing change went into effect, and Q4 became Honeycomb's biggest quarter ever, the company said, as it's made it easier for customers to upgrade. It's also seen less churn in its top tier, Yen said.&nbsp;</p><h2><strong>Honeycomb plans to invest in R&amp;D&nbsp;</strong></h2><p>Since the last raise$11.4 million in September 2019<strong></strong>Honeycomb says it has grown tripled its number of large enterprise customers, and grow its overall customer base 150% to 300 total, including massive firms like Hello Fresh, Intercom, and Slack. It has also more than doubled its annual recurring revenue and nearly doubled its employee headcount to about 70 employees.</p><p>Last year, Yen and Majors experienced an uptick of investors approaching them and, ultimately, Honeycomb went with e.venture Growth to lead the round because it was impressed by its understanding of how Honeycomb plans to grow.</p><p>"The best time to raise is when you don't need to," Yen said. "Being a position where we've seen really strong growth, we felt like it was a good time to entertain some of these conversations and see where it might lead."</p><p>While the last round was focused on sales and marketing efforts, Yen says this round will focus on investing in research and development.&nbsp;</p><p>"We're nurturing our hopes and dreams for what it could look like," Yen said. "It's a battle of prioritization. We're looking to build out what a product should look like, what the future of visibility looks like."</p><p>Honeycomb now has a head of product and head of design, but it's looking to add more employees on those teams to improve the experience of using its product. It also will use the funding to build more integrations with other apps.&nbsp;</p><p>"We were excited to really lean into what it looks like to be a product-led company, to let design explore and ideate rather than just polish some rough edges," Yen said.</p><p>Honeycomb is also embarking on a period of "intense hiring and onboarding," Yen says. It plans to more than double the engineering team,&nbsp;between now and the end of 2021.&nbsp;</p><p>"It's always been important for Charity and I to pay attention to the cultural parts of building a company in order to build a company that people are proud of," Yen said. "Giving the parameter shifting underneath us, not having hallway chatter means we've spent more time thinking about how to capture that and replicate that in a distributed environment."</p><p>This will all help Honeycomb take on large public competitors like Splunk, New Relic, and Datadog. Those companies did not start off as observability companies, Yen says. Rather, they are trying to acquire or build their way into a more flexible observability product.&nbsp;</p><p>"Each of these three has tried observability, either sprinkling it into their assignments or slapping in on their homepage," Yen said. "While I think it's certainly validating to see them adopt our messaging, it's difficult to take something that's meant for full-tech search analysis and force it to be fast enough to be usable in the everyday world."</p><p><em><strong>Got a tip'</strong>&nbsp;Contact this reporter via email at&nbsp;<a href="mailto:rmchan@businessinsider.com">rmchan@businessinsider.com</a>, Signal at&nbsp;646.376.6106,&nbsp;Telegram at @rosaliechan, or&nbsp;Twitter DM at&nbsp;<a href="https://twitter.com/rosaliechan17">@rosaliechan17</a>. (PR pitches by email only, please.) Other types of secure messaging available upon request.</em></p><p><strong>SEE ALSO:&nbsp;<a href="https://www.businessinsider.com/microsoft-programming-languages-visual-basic-c-net-typescript-2020-9" >Here's how Microsoft's flagship programming languages like C# and TypeScript as well as its embrace of open source software are a key part of its strategy to win customers in the cloud wars</a></strong></p><p><a href="https://www.businessinsider.com/honeycomb-ex-facebookers-raised-20-million-in-funding-2020-9#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/worlds-most-expensive-liquid-thoroughbred-horse-semen-2020-3">Why thoroughbred horse semen is the world's most expensive liquid</a></p>
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