PostHog raises $12 million in funding to bring the only open-source product analytics tool to software teams

No day goes by without another headline on Software-as-a-Service (SaaS). Also known as cloud-based software or apps, SaaS is a software delivery model that allows software applications (apps) to be accessed from any device with an internet connection. Instead of hosting applications on-premise, most organizations now pay SaaS companies to use their applications just like buying power from electric companies.

However, there is one dirty little secret most SaaS companies would not like you to know: hosting your applications with third-party SaaS companies require you to send your data to them. You may say there are rules and regulations. Unfortunately, as we’ve learned in recent days with SolarWinds and other data breaches. there is no guarantee that your data is safe.

That brings us to PostHog, a San Francisco-based tech startup that provides open-source product analytics to help software teams understand user behavior. You may be wondering why need other product analytics tool with a plethora of SaaS-based tools (Mixpanel, Amplitude, and Heap but to name a few) already out there. As stated earlier, the problem is, these alternatives are SaaS-based, all of them require you to send your data to third-parties. In addition, they all charge based on the volume of data transferred.

While these other Saas-based are very powerful, they can also be frustrating for developers. These tools are also frustrating to integrate with a tool that charges on usage. Currently, PostHog is the only open-source product analytics tool that does not send user data to third-parties. Since February 2020, there have been 3,000 deployments of PostHog’s software, ranging from startups to some of the world’s largest institutions including SpaceX, Staples, airBaltic, and many others.

To further accelerate growth and meet increasing demands for its tools, PostHog announced yesterday that it raised $12 million in Series A funding led by GV (formerly Google Ventures), with participation from Y Combinator’s Continuity Fund. Alongside the funding, PostHog also brings on board Jason Warner (CTO, GitHub) as an investor, joining Solomon Hykes (Founder, Docker) and David Cramer (Founder, Sentry) who participated in the company’s seed round.

PostHog was founded by James Hawkins (CEO) and Tim Glaser (CTO) on January 23rd, 2020. The duo started working together on a startup in August 2019 with the first idea being to help engineers manage technical debt. It didn’t work out, but they later realized the power of treating growth as an engineering problem. They also knew that many engineers struggle to understand their impact on their users.

PostHog was originally conceived during Y Combinator’s Winter 2020 batch, the two founders had been working on a different product at the time, but were frustrated at having to send user data to third parties to understand which features of their software were being used.

On learning how enterprises self-build a data pipeline, data lake, and analytics stack, the pair quickly realized they could build something much easier to use for large teams of developers or product managers, that would help anyone answer simple product questions without writing any code or sending any data to a third party.

Today, PostHog enables software teams to understand user behavior – auto-capturing events, performing product analytics and dashboarding, enabling video replays, and rolling out new features behind feature flags, all based on its single open-source platform.

“Our goal is to increase the number of successful products in the world. That starts with empowering engineers to improve a business’ metrics and consolidating the disparate set of tools out there today to understand user behavior. We also now offer PostHog Enterprise, which is a more scalable version of our platform, designed to support tens of thousands to tens of millions of users,” Hawkins said.

PostHog raised an initial $3M seed round in March 2020, as COVID-19 caused many parts of the U.S. to go into lockdown. Unimpeded by the shift to remote work, the company then closed a $9M Series A from GV and Y Combinator’s Continuity Fund in July. The latest round, led by GV, has enabled PostHog to further build the team, expand the breadth of use cases, and to launch a scalable enterprise version.