The first company that Andreessen Horowitz invested in just went public — and saw a 40% pop (APTI)

YouTube/Apptio

Apptio, which helps IT departments manage the software and services that they buy, had a strong public market debut Friday, jumping 40% above its opening price to close at $22.55 per share.

That gives Apptio — who also happens to be the first company to get funding from VC firm Andreessen Horowitz — a market cap of roughly $840 million, a jump from the $600 million valuation it commanded in its 2012 funding round, but slightly below the $22.69 share price it sold in its series E funding in 2013.

Apptio's public offering could serve as a bellwether of things to come in the tech IPO market, which has been unusually slow this year. There's been only five VC-backed tech IPOs this year, but the pace is accelerating this quarter, as a number of companies like Nutanix and Coupa are expected to pull the trigger in the coming weeks.

Apptio's CEO Sunny Gupta told Business Insider that the bar for being a public company is much higher now than in previous years, as investors are paying much more attention to a combination of growth and being cash flow positive. 

"Going IPO is not for every company. The sentiment today, investors are looking for growth and near term cash flow break even," Gupta told us.

Apptio posted $129.3 million in revenue in 2015, up 21% from 2014. It is on pace to surpass $150 million in revenue this year, at a similar 21% growth rate. The company's not cash flow positive, but it's free cash flow is improving to a loss of $3.7 million in the first six months of this year, down from $8 million in the same period of last year. It also posted a $41 million loss in 2015.

Better way to manage IT budgets

In its S-1 filing, Apptio said it expects to continue to incur losses for "the foreseeable future" as revenue growth slows and it invests in expanding its sales, product development, and recruitment efforts.

Gupta declined to comment on future revenue forecasts. Instead, he noted the huge market potential he sees for Apptio, which is used by company CIOs to track and analyze their budget and effectiveness of IT purchases.

"Their budgets need a better way to be managed and these CIOs need to be able to make data-driven decisions," he said.

In a way, Apptio's solid IPO is a validation of Gupta's vision to make a software specifically targeting CIOs. There's been talks of CIOs becoming less important as more IT purchases are made within small groups of companies, democratizing the IT purchasing decisions.

"The role of the CIO has become more strategic than ever because every business is a technology business," he said.

Andreessen Horowitz led Apptio's $14 million Series B funding in 2009. They don't own any board seats in the company but has been a strategic advisor since then.

"We've been very fortunate to have a broad set of investors," Gupta said. "They know this is early days of Apptio, the start of the next chapter."

NOW WATCH: The world’s largest pyramid is not in Egypt