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Spiceworks Lands $57 Million To Grow Its IT Community

Spiceworks, an IT community platform that offers free management tools, has closed a Series E funding round from Goldman Sachs.

Spiceworks announced that it closed a $57 million investment from Goldman Sachs this week. This is the fifth investment round for the IT startup since it was founded in 2006. CEO Scott Abel says he’ll use the money to grow the Spiceworks platform, hire new employees, and expand the company’s user base.

Spiceworks makes IT management tools, including network management, inventory, and help desk software. The products are free and supported by ads that appear in the tools’ consoles. Because the tools have specific information about the products being used, ads and content can be directly targeted.

“Say you’re on our inventory app, and looking at a Dell server--the app sends a message to look for articles, and for alerts from Dell about this model of server running that specific OS,” said Abel in an interview.

This degree of vendor targeting may be off-putting to potential users, and Abel said the company attacks this issue straight ahead. “We have an open privacy policy and we try to draw a hard line about where we do and don’t allow vendors in,” he said. “Vendors can join the community and pose questions, but we have strict guidelines about what you can and can’t do. We have moderators, volunteers, who enforce these guidelines.”

In addition to creating its own tools, Spiceworks has a partnership with Fiberlink to offer free mobile device management software to Spiceworks users. Fiberlink provides a base package at no cost, but some features, such as remote wipe, must be purchased.

The company is also borrowing a page from Salesforce by opening its platform to third-party developers to allow them to build and sell apps. “We’ll launch an app store for plug-ins, utilities, and apps on our platform,” said Abel. “We’ll provide the infrastructure and take a cut of the revenue.”

IT applications are only one part of Spcieworks’ business model. Perhaps more important is the community of IT professionals that the company has gathered. This community come to Spiceworks for a variety of content, including peer-generated product reviews, how-to articles, scripts, and Q&As. This content is surfaced through the tools, and through a community portal.

Abel said Spiceworks currently has 5 million monthly users, which includes people who have downloaded tools and those who come to the site for the content.

“Ninety-nine percent of the content is developed by our users,” said Abel. “That’s one reason why it’s held in such high regard. It’s a network of peers that people trust.” What compels folks to contribute content? “Primarily it’s pride,” said Abel. “They want to share knowledge and expertise to benefit others. We sure don’t pay ‘em.”

Other companies have recognized the potential of the community model. Peerlyst is a beta site that aims to connect IT pros with one another to share production information, reviews and experiences. In a similar vein, IT Central Station bills itself as a social network for IT pros that features peer-generated tech reviews.

The recent investment from Goldman Sachs will help Spiceworks in its own bid to expand its community of five million users. “We want five to go to ten, ten to go to fifteen,” said Abel. “So we’ll expand our spend in online and offline initiatives to enhance the brand and get the word out there to spread the message about Spiceworks.” He said the company’s long-term goal is to become publicly traded.

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Drew is formerly editor of Network Computing and currently director of content and community for Interop. View Full Bio

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