VC Firms Pour $80 Million into Onshape’s War Chest

Cloud-hosted CAD provider Onshape has just secured a new round of VC financing.

This year, Christmas came early for the team at Onshape. On September 24, the company announced it has secured $80 million in new equity funding from a number of VCs.

Andreessen Horowit, the California-based VC firm that led the latest round of financing, is cofounded by Marc Andreessen, remembered for his role in launching Netscape. The firm is known for taking chances on startups and concepts that others might shy away from. It has invested in, among other things, the Bitcoin commerce (”10 VC Firms Betting Big on Bitcoin and the Blockchain,” July 2015, Coindesk.) The firm was also an early investor in Facebook, Twitter, Airbnb, Pinterest, and Skype.

The firm’s investment in Onshape is a sign of the VC community’s confidence in cloud-hosted CAD. Andreessen Horowit’s general partner Peter Levine said, “We’ve been closely following the CAD industry for a long time. The Onshape team immediately stood out, having built a robust CAD system using a cloud-based technical architecture that most had considered impossible. The Onshape product is perfectly suited for an increasingly mobile workforce, which now can create and edit 3D models anywhere, on any device.”

Onshape offers its parametric mechanical modeler as subscription software, running from a standard browser. This is a departure from traditional CAD software, which typically runs on a professional workstation and is distributed through resellers. (For more, read “Onshape Bete Goes Live,” March 2015). Critics often cite poor bandwidth connection and CAD software’s heavy computing demand as the reason cloud-hosted CAD isn’t practical, but Onshape has proved its product can overcome both.

John McEleney, former CEO of SolidWorks, is the current CEO of Onshape. He said, “The new funds will help us expand our footprint globally. We’ll invest in R&D programs, like localizing our software and mobile initiatives. It’ll help us solidify our trajectory.” Onshape saw its user base grew to more than 10,000 within six months of its launch, according to the company. It revealed that it has raised more than $144 million in total funding.

Many other CAD software vendors are exploring the subscription model, some with cautious, small programs, others with a vigorous push. Siemens PLM Software now offers its mainstream CAD package Solid Edge under subscription. Autodesk has championed subscription licensing by declaring a firm deadline after which it will stop selling perpetual licenses.

On the eve of Onshape’s funding announcement, Autodesk CEO Carl Bass issued a statement. He said, “The new funding round for Onshape indicates what we’ve known for several years now—the future of design and engineering software is in the cloud. We’re glad to see others in the industry realizing this too. Autodesk was the first to the cloud and is the leader in cloud-based CAD and the only vendor with integrated cloud based CAM and simulation. We already have more than a million people using our cloud-based tools.”

Many Autodesk 3D modeling software titles incorporate cloud-hosted data management, file management, and on-demand computing services, but require a thick client or a full installation on the local machine. Its PLM software Autodesk PLM 360, however, is delivered through the browser in the classic SaaS format.