Index has the opportunity to lead a Series C financing in Coder. Coder automates, powers, and secures the development environment, letting developers focus on writing code. This moves software development to the cloud, centralizing organizations' development initiatives and offering improvements in development velocity and enterprise security. The high level goal is to remove the limitations of local machines for software engineers, increasing productivity while preserving security.
Coder was founded in 2017 by John Andrew Entwistle (CEO), Ammar Bandukwala (CTO), and Kyle Carberry. The three founders first met online and have been coding together since the age of 13. They began working immediately after high school on the developer tools they wished they had. Their open source product, coder-source, has gained widespread adoption with 25% of users in Fortune 500, 36K Github stars and 23M Docker pulls. The enterprise version, launched January this year, has amassed impressive traction with $5M ARR. The Coder team is now at over 60 employees, with experienced senior leadership in Sales, Public Sector, and Customer Success.
Despite this impressive traction, based on what I know now, I would not recommend a Series C investment in Coder. I believe that coding will eventually move to the cloud, but don't have strong enough conviction in the team, product, and positioning of the company as they move to provide value from developers to enterprises**.** In section What You Have to Believe & Additional Diligence, I have included some risks, and additional questions that I would need to explore to increase my conviction around Coder and change this to a positive recommendation. For completion, I have included a high-level outline of how I would think through valuation if I were to increase my conviction in section Valuation.
The high level thesis is that development will move to the cloud, the same way that Microsoft Word moved to Google docs. This will be because of an increased focus on developer productivity, a shift left in application security, and shift to remote.
Full evolution and history of Coder product releases and learnings available in History & Evolution of Coder Product appendix.
The current solutions include the open-source code-server, released in 2019, and the enterprise version, released in January 2020. Both code-server and Coder Enterprise are solutions that let enable cloud-based software development through the browser. Below is a comparison between the Open Source and Enterprise products.
Coder Open Source vs. Enterprise
Table adopted from Coder.com website
The pricing for the Enterprise product today is not public, but looks like:
Many pilots begin free, and they allow 1-10 users to also be free for first year.
After speaking with a director-level Coder team member, the biggest upcoming changes in the product roadmap and vision for Coder Enterprise are all under the theme of increasing controls and flexibility. In essence —