Only a few months ago, Vercel, the company behind the popular Next.js framework for front-end developers, announced a $102 million Series C funding round that took its valuation to $1.1 billion. Today, it's announcing a $150 million Series D round that puts its valuation at $2.5 billion. The round, which brings Vercel's total funding to $313 million, was led by GGV Capital, with participation from existing investors Accel, Bedrock Capital, CRV, Geodesic Capital, Greenoaks Capital, GV, 8VC, Flex Capital, Latacora, Salesforce Ventures and Tiger Global, as well as new investor SV Angel.
Vercel sits at the nexus of a number of industry trends, but maybe most importantly, it is part of the Jamstack movement that prioritizes fast, static sites -- but with just enough dynamic capabilities to enable modern, personalized experiences. It was only last week that Vercel's fellow Jamstack player Netlify raised $105 million, and I wouldn't be surprised if we saw a few more of these rounds in this space in the coming months.
Vercel, which monetizes its open-source efforts by offering a hosted serverless platform for front-end applications, saw a lot of growth in the previous months, with Next.js having grown to 2 million weekly npm installs now and traffic on its edge network growing 700% since April 2020. It now serves more than 24 billion requests on its network.
"We were already an investor. The company had set very high expectations for itself for this year -- and they were blowing those expectations away from a financial plan standpoint," GGV managing partner Glenn Solomon told me. "We could see what was happening with the Next.js community, with the Vercel business model and how it really snaps together with the Next.js community. The whole world is in love with the concept of product-led growth [...]. At GGV, we've had the good fortune of being involved with companies like Square, Slack, HashiCorp and others, which are companies where there really was -- at least for a period of time -- an underlying product-led growth dynamic that really helped catapult growth. That is what's going on at Vercel in a major way right now."
As Vercel co-founder and CEO Guillermo Rauch noted, raising a new funding round now was a "function of our ambitions." "If we look at Vercel as becoming this end-to-end platform where all software development on the web happens, from idea to production through getting your analytics on what to improve next, to the next idea -- we definitely need [the funding]," he said. "I think the alignment with GGV came from our values. We're big fans of their motto: 'go long.' They're fans of open source as this new model of creating highly profitable companies. I think the combination was there and then the mechanics were efficient. We're all about performance at Vercel, so it was that match made in heaven."
Vercel plans to use the new funding to hire across teams, but especially to expand its go-to-market efforts. Rauch also noted that the company is looking at strategic acquisitions as it builds out its end-to-end platform. Rauch specifically noted that Vercel started building more analytics features in 2020, which helped the company to add another dimension to its platform beyond the framework and its hosting service.
The team is also looking at improving the overall development workflow for developers on its platform. With the launch of Checks, it recently started pushing more into this direction, but that's only the start, Rauch noted. "That's another logical area of investment for us," he said. "We hear a lot that the framework is great, the hosting is great, but the workflow Vercel provides makes all the difference."