Network-monitoring company Kentik Technologies Inc. said Thursday it raised $40 million in new funding as the recent Facebook Inc. outage highlights the need for businesses to monitor network performance.

The company will use the funds to improve product functionality, increase its sales force and develop its network of partnerships, said Avi Freedman, Kentik’s chief executive and co-founder.

Kentik...

Network-monitoring company Kentik Technologies Inc. said Thursday it raised $40 million in new funding as the recent Facebook Inc. outage highlights the need for businesses to monitor network performance.

The company will use the funds to improve product functionality, increase its sales force and develop its network of partnerships, said Avi Freedman, Kentik’s chief executive and co-founder.

Kentik has raised $102 million since it was founded in 2014. It declined to discuss its valuation.

The San Francisco-based company’s platform monitors the performance of business and service-provider networks to spot congestion, service degradation, outages and anomalies that might indicate a problem. It sends alerts and recommends corrective actions, such as a better way to reroute traffic.

Those capabilities enabled the company to witness Monday’s Facebook outage as it unfolded. The disruption occurred when Facebook engineers issued a networking command that accidentally pulled the company’s data centers off its network. This led to a series of failures that pulled all of Facebook’s properties off the internet.

“This is an outfit with infinite resources and some of the most talented people,” Doug Madory, Kentik’s director of internet analysis, told The Wall Street Journal Monday. He said Facebook may not have applied enough scrutiny to its own solutions and backup processes.

“I think that the biggest takeaway that I have for the Facebook outage is that it’s important to understand not the network as a separate entity, but also in terms of all the application changes, and all the configuration changes that are being made to it,” Mr. Freedman said.

Businesses are looking for more intelligent and insightful management tools as they continue to accelerate their digital transformation efforts and their networks grow in complexity and criticality, said Mark Leary, research director for network analytics and automation at research firm International Data Corp.

Kentik said its roughly 300 customers include data-storage and collaboration company Dropbox Inc., videoconferencing company Zoom Video Communications Inc., Major League Baseball and networking services company Akamai Technologies Inc.

Kentik CEO and co-founder Avi Freedman

Photo: Kentik Technologies Inc.

Mr. Freedman noted that the company’s offering is provided as a cloud-based platform, or software-as-a-service, which differentiates it from many other network-monitoring tools on the market.

In the network-performance management market over the next five years, almost all the growth is expected to come from SaaS-based solutions, IDC’s Mr. Leary said.

The advantage of SaaS, as opposed to a system made up of on-premise hardware and software, is that the provider can continually supply updates and maintenance.

IDC said the enterprise market for network-performance management tools such as Kentik’s was $2.4 billion in 2020 and is expected to grow 7% this year. Other companies in the market include Gigamon, NetScout Systems and SolarWinds.

Mr. Leary said the need for tools that can give businesses increased visibility into their networks is clear.

“If you don’t have a good understanding of what’s going on across your network and what’s going across your cloud portion of your network—and your home network is serving a remote employee—then you’re operating with a number of blind spots,” he said.

Existing investor Third Point Ventures led the Series C round with participation from August Capital, Tahoma Ventures, DCVC, Engineering Capital and Vistara Growth and new investors Golub Capital, Gaingels and Delta-v Capital.

Write to John McCormick at john.mccormick@wsj.com