Retool raises $45M at a $3.2B valuation to make building custom software as easy as buying off the shelf

The explosion of cloud computing, broadband networks, smarter devices and a vogue for building SaaS startups has created a universe of software for businesses and consumers: whatever it is that you want or need to do, there’s an app for that, as Apple once famously said.

But that is not the only game in town. A startup called Retool believes there’s still a lot of mileage and important work left to do in the world of bespoke software — apps developed for a specific use and a specific user. Since being founded in 2017, it has seen more than 500,000 apps built on its platform with billions of queries pointing to strong usage of that software. And today, it’s announcing a sizable fundraise of $45 million at a valuation of $3.2 billion to further underscore its traction in the market.

The idea with Retool, in the words of CEO and co-founder David Hsu, is that it provides “a new way of building software.”

“Our core thesis is that when you look at how software has been built for the last 20 or 30 years, it really hasn’t changed,” he said.

You sit down at your computer, and you type away and it is based on really specialized training, specialized knowledge, continued Hsu: “The idea behind Retool is that maybe there could be a much faster way to build software.” Here, you use drag and drop interfaces for major components, with code written on top of that, “for the last 20% or 30%” of the work, resulting in something flexible and customized to what users need.

If Retool has its way, software may indeed eat the world, but it sounds like it will come in the form of many different cuisines.

The funding, which Retool has described to me as a Series C2, is coming from Sequoia Capital, Stripe co-founders John and Patrick Collison, GitHub’s former CEO Nat Friedman, Elad Gil, Daniel Gross, and Caryn Marooney, the former VP of comms at Facebook who is now a partner at Coatue. All are previous investors in the company. The round comes on the heels of the company raising a more modest $20 million Series C in December 2021 (which valued it at $1.93 billion).

To date, Retool has been focusing primarily on a category of software typically described as “internal apps” — not customer-facing or consumer-facing software but tools to help people in organizations do their jobs.

Its customers include a lot of companies that you might have thought already had the capability to build things like this already — big tech players like Amazon and Pinterest and Coursera, as well as the NFL, NBCUniversal and others. This latest injection will be used to double down on what it’s been doing, and to hire more talent, to create more advanced and deeper functionality, and to expand geographically from its home base in San Francisco.

Retool’s core platform today is built around around 90 “components” that can be fit together — not so much in a “low code” approach but for software developers and engineers to get some of the basic building blocks like forms, charts, and tables out of the way. On top of this, it also provides validation, accessibility and other tools needed to verify all is working as it should be. Then developers can connect up any database or API — anything with a REST or GraphQL API, it says, as well as PostgreSQL, MongoDB and other datastores — to finish writing the rest of the software.

Hsu’s bet is that this approach makes both building and maintaining custom software much easier. Two weeks of typical development can be whittled down to one day, he said.

The focus on internal apps is interesting. In a way, it means Retool’s profile remains relatively low. Hsu said that this was a strategic choice the company made, since internal apps account for more than 50% of all apps in the world, and they are precisely the use case for where organizations might need something more customized, which might run on a private cloud, or on premise, or simply work with whatever they are using across legacy and more modern systems.

However, it’s important to note that this is not where the company sees itself longer term Future plans include building functionality to let developers work on customer-facing apps and potentially consumer-facing products, too. Having the backing of Stripe’s co-founders is very interesting in this regard: Stripe’s tools are precisely designed to help build those two latter categories of apps.

It certainly has a number of existing customers that might well want to take advantage of that kind of expansion, should it get launched. “The flexibility and ease of Retool’s platform has transformed the scope of our internal tools roadmap from being years long to months long. Retool has changed the way we operate,” Shon Saoji, senior engineering manager at Coursera, said in a statement to TechCrunch.

Retool’s growth and positioning is very catchy, not least because of how it is zigging when so much else is zagging. It’s not too surprising to see Sequoia, which put a lot of money behind another anachronistic-sounding idea — a messaging app (WhatsApp) — at a time when it seemed like that space was also all sewn up.

“Retool sits at the intersection of two major trends: the rise of the developer, and the increasing importance of operational excellence after a pandemic that compressed a decade of digital transformation into two years,” said Bryan Schreier, a partner at Sequoia. “Retool empowers engineers to accelerate the operations of their companies by building internal software incredibly fast. Retool is well positioned to define the future of internal tooling in the enterprise and, more broadly, how developers actually develop. In the face of macroeconomic uncertainty, Retool’s value proposition is even more stark.”

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