Sierra Ventures Leads $8M Investment in Applitools to Create Visually Perfect Software Powered by Artificial Intelligence

Tim Guleri

by Tim Guleri

I am excited to announce my latest investment, Applitools, and partnering with world beating entrepreneurs Gil Sever, Moshe Milman and Adam Carmi. Applitools, founded in 2014 in Tel Aviv and HQ in San Mateo, is a pioneer in using cloud-based software that mimics the human eye and brain. Applitools can detect if an application has a “visual” bug while it’s in development or at run time.  We are calling this new category Visual Application Performance Management (VAPM).

As the world moves to faster release cycles, digitization and more display devices, visual fidelity becomes even more important. Companies cannot get by doing it the old fashioned ‘manual’ way. An impressive list of 200+ customers seem to agree, including household names: HP, SAP, Salesforce, Dropbox, CISCO, Wells Fargo, Capital One, MasterCard, BNY Mellon, TransUnion, SONY, BOSE, Verizon, LVMH, Siemens, Accenture, Adobe, Cox Automotive, Slack, Twilio, BofA, USAA, Lego, Twitter, Lyft, McKesson, Zillow and Juniper Networks.

Venture Firm with a Prepared Mind and a CEO with Chutzpah
It was 11:14am on Nov 14th 2016 and this email hits my inbox.

Hello Tim,
My name is Gil and please pardon me for barge in on you like that, but ….
Recently me and one of my co-founders Moshe (we are three co-founders that worked together for many years in a previous company that I have founded) have relocated to the Bay Area, and set our office in your building, at suite 810.
If you're interested, we would be glad to meet you, learn more about you, and tell you more about what we do. I wrote to you because your areas of interest seemed to me more related to what our company does.

Looking forward to hearing back from you.
Best regards,

Later that week Gil dropped by to have coffee with me in what he describes as the shortest trip he took to meet a Venture Capitalist (2 flights of steps).  He described how Applitools built unique IP in the UI testing and monitoring. A cloud AI brain compares UI at scale using bitmapped images. This is coupled with AI techniques that are far superior, fast and scalable (i.e., you can test multilingual websites or applications w/o knowing the language) giving them defensibility. Besides, as their “UI” cloud scales and grows (currently over 12M compares / quarter), the algorithm gets more accurate providing increased defensibility. I was hooked.

My operating thesis is that AI applied to key business processes will open up massive potential markets. I am on the lookout for these unique companies. Software is eating the world and more Business Applications and Software are being written today as companies strived to stay competitive and expand / defend their markets. In addition to consumer companies that have always written customer-facing applications, traditional business to business (B2B) companies are trying to get direct access to customers. They are doing so by writing application and converting their websites from brochure-ware to locations where business is conducted. Another business trend is commerce moving online. Whole industries are being transformed via an application interface like transportation and food delivery. They need AI powered Automation.

My Kind of Entrepreneurs
For the next four months we spent a lot of time together going over their vision on how they saw the future, how they were thinking about product, sales, hiring and where they needed help. I love investing in entrepreneurs where there is a shared passion for building a great company and we can have fun doing it.

Gil and me at the USA - Honduras Game. 6 - 0 USA ! USA !


Adam and me buzzing around Tel Aviv on his Ducati


This team is a class act and my kind of entrepreneurs. One particular incident that stands out in my mind is when Gil and I were on the way to the USA Honduras soccer game. I was driving on the 101 and Gil and I were negotiating the final points of the termsheet.  By the time we arrived at the Avaya Stadium in San Jose, we had a handshake. After we shook hands, Gil proceeds to tell me that in the last two days since we’d talked they had received two additional termsheets.  While the open points on the Sierra termsheet were very minor, it was a class act on Gils part to put our relationship ahead of deal leverage and not mentioned the two termsheets he had received until we shook hands. That relationship capital Gil built with me has cemented a great relationship for now and for the future.

VAPM: Beginning of a large potential market
As applications move toward a micro-services architecture, i.e., server-side functionality is delivered through a series of APIs (Twilio, AWS Llamda) the user interface is where the application logic lies and responsive interfaces need more testing. Point being, traditional “server load testing," will give way to more attention moving to how the UI/ UX is tested. The server-side API scales horizontally supplied by external providers who hit good performance SLA’s and load testing is not that relevant.

With shorter release cycles, cross-platform operability (hundreds of device / browser combinations), and zero tolerance to flaws in a user’s digital experience, the need to ‘non-human’ scale is essential. Trends such as CI-CD, DevOps, Shift-Left and Full Automation are top of mind for all software and senior execs and awareness / need for such a solution is high.

Applitools' unique approach has given them an early leadership with significant customer traction. Customer love for their product is evident: Our customer due diligence calls indicated that the pain is very real based on the macro trends mentioned above. GE, Salesforce, Bose, Sony all expanded their usage after initial purchase. The sales cycles are very fast (Average Sales Cycle is 2.9 months) and the lead flow is largely inbound.

While there is a lot of building ahead of us, and there are many twists and turns this path will take, Sierra and I are excited to welcome you to our family and promise you the full power of the partnership to help build an iconic company. Thanks for putting your trust in us.

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