Feb
18
2021
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Logging startups are suddenly hot as CrowdStrike nabs Humio for $400M

A couple of weeks ago SentinelOne announced it was acquiring high-speed logging platform Scalyr for $155 million. Just this morning CrowdStrike struck next, announcing it was buying unlimited logging tool Humio for $400 million.

In Humio, CrowdStrike gets a company that will provide it with the ability to collect unlimited logging information. Most companies have to pick and choose what to log and how long to keep it, but with Humio, they don’t have to make these choices, with customers processing multiple terabytes of data every single day.

Humio CEO Geeta Schmidt writing in a company blog post announcing the deal described her company in similar terms to Scalyr, a data lake for log information:

“Humio had become the data lake for these enterprises enabling searches for longer periods of time and from more data sources allowing them to understand their entire environment, prepare for the unknown, proactively prevent issues, recover quickly from incidents, and get to the root cause,” she wrote.

That means with Humio in the fold, CrowdStrike can use this massive amount of data to help deal with threats and attacks in real time as they are happening, rather than reacting to them and trying to figure out what happened later, a point by the way that SentinelOne also made when it purchased Scalyr.

“The combination of real-time analytics and smart filtering built into CrowdStrike’s proprietary Threat Graph and Humio’s blazing-fast log management and index-free data ingestion dramatically accelerates our [eXtended Detection and Response (XDR)] capabilities beyond anything the market has seen to date,” CrowdStrike CEO and co-founder George Kurtz said in a statement.

While two acquisitions don’t necessarily make a trend, it’s clear that security platform players are suddenly seeing the value of being able to process the large amounts of information found in logs, and they are willing to put up some cash to get that capability. It will be interesting to see if any other security companies react with a similar move in the coming months.

Humio was founded in 2016 and raised just over $31 million, according to Pitchbook Data. Its most recent funding round came in March 2020, a $20 million Series B led by Dell Technologies Capital. It would appear to be a decent exit for the startup.

CrowdStrike was founded in 2011 and raised over $480 million before going public in 2019. The deal is expected to close in the first quarter, and is subject to typical regulatory oversight.

Feb
01
2021
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Databricks raises $1B at $28B valuation as it reaches $425M ARR

Another hour, another billion-dollar round. That’s how February is kicking off. This time it’s Databricks, which just raised $1 billion Series G at a whopping $28 billion post-money valuation.

Databricks is a data-and-AI focused company that interacts with corporate information stored in the public cloud.

News of the new round began leaking last week. Franklin Templeton led the round, which also included new investors Fidelity and Whale Rock. Databricks also raised part of the capital from major cloud vendors including AWS, Alphabet via its CapitalG vehicle, and Salesforce Ventures. Microsoft is a previous investor, and it took part in the round as well.

But we’re not done! Other prior investors including a16z, T. Rowe Price, Tiger Global, BlackRock, and Coatue were also involved along with Alkeon Capital Management.

Consider that Databricks just raised a bushel of capital from a mix of cloud companies it works with, public investors it wants as shareholders when it goes public, and some private money that is enjoying a stiff markup from their last check into the company.

The company has made its mark with a series of four open source products with a core data lake product call Delta Lake leading the way. You may recall that another hot data lake company, Snowflake, raised almost a half a billion dollars on a $12.4 billion valuation a year ago before going public last September with a valuation twice that. Databricks has already exceeded that public valuation with this round — as a private company.

When we spoke to Databricks CEO Ali Ghodsi at the time of his company’s $400 million round in 2019, one which valued the company at $6.2 billion at the time, he said his company was the fastest growing enterprise cloud software companies ever, and that’s saying something.

The company makes money by offering each of those open source products as a software service and it’s doing exceedingly well at it, so much so that investors were tripping over each other to be part of this deal. In fact, Ghodsi said in a conversation with TechCrunch today that his company had targeted a much more modest $200 million raise, but that figure grew as more parties wanted to invest funds into the company. Even with that, Databricks had to turn capital away, he added, after deciding to cap the round at $1 billion.

The extra $800 million that the company raised will be used for M&A opportunities with an eye on talent, spend on establishing a Lakehouse concept, international expansion, while also expanding its engineering team, the CEO said.

Ghodsi also made clear that he does not intend to let the percentage of revenue that the company spends on R&D to drop, as is common at modern software companies — as many SaaS companies grow, they expend more of their revenue on sales and marketing efforts over product spend, something that Databricks wants to avoid by continuing to invest in engineering talent.

Why? Because Ghodsi says that the pace of innovation in AI is so rapid that IP becomes outdated in just a few years. That means that companies that want to lead in this space will have to stay on the bleeding edge of their market or fall back swiftly.

The Databricks model appears to be working well, with the company closing 2020 at $425 million in annual recurring revenue, or ARR. That figure, up 75% from the year-ago period, is also up from a $350 million run rate at the end of its Q3 2020. (For more on Databricks’ business, product and growth, head here.)

Notably Ghodsi told TechCrunch that this deal only started to come together in December. It’s February 1st today, which means that it took on this bushel of new funding remarkably quickly.

Finally, at $425 million in ARR, is the CEO worried about having a valuation sitting at roughly a 65x multiple? Ghodsi said that he is not. He said that he told his company during an all-hands earlier today that the AI market is a long journey, one that he hopes to be on for decades, and the stock market will go up and down. His point, as far as I could read into it, was that so long as Databricks keeps growing as it has, its valuation will take care of itself (and that seems to be the case so far with this company).

What’s certainly true is that Databricks is now as rich as it has ever been, as large as it has ever been, and in a market that is maturing. Let’s see what it can do with all this money.

Jun
30
2020
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Upsolver announces $13M Series A to ease management of cloud data lakes

There’s a lot of complexity around managing data lakes in the cloud that often requires expensive engineering expertise. Upsolver, an early-stage startup, wants to simplify all of that, so that a database administrator could handle it. Today the startup announced a $13 million Series A.

Vertex Ventures US was lead investor, with participation from Wing Venture Capital and Jerusalem Venture Partners. Today’s investment brings the total raised to $17 million, according to the company.

Co-founder and CEO Ori Rafael says that as companies move data to the cloud and store it in data lakes, it becomes increasingly difficult to manage. The goal of Upsolver is to abstract away a lot of those management tasks and allow users to query the data using SQL, making it a lot more accessible.

“The main criticism of data lakes over the years is they become data swamps. It’s very easy to store data there very cheaply, but making it [easy to query] and valuable is hard. For that you need a lot of engineering, which turns the lake into a swamp. So we take the data that you put into a lake and make it easier to query, and we take the biggest disadvantage of using a lake, which is the complexity of doing that process, and we make that process easy,” Rafael explained.

Investor In Sik Rhee, who is general partner and co-founder at Vertex Ventures US, sees a company that’s creating a cloud-native standard for data lake computing. “Upsolver succeeded in abstracting away the engineering complexity of data pipeline management so that enterprise customers can quickly solve their modern data challenges in real time and at any scale without having to build another silo of expertise within the organization,” he said in a statement.

The company currently has 22 employees spread out between San Francisco, New York and Israel. Rafael says they hope to expand to 50 employees by the end of next year, including adding new engineers for their R&D center in Israel and building sales and customer success teams in the U.S.

Rafael says he and his co-founder sat down early on and wrote down the company’s core values, and they see a responsibility of running a diverse company as part of that, as they search for these new hires. Certainly the pandemic has shown them that they can hire from anywhere and that can help contribute to a more diverse workforce as they grow.

He said running the company and raising money has been stressful during these times, but the company has continued to grow through all of this, adding new customers while staying relatively lean, and Rafael says that the investors certainly recognized that.

“We had high revenue compared to the low number of employees with [sales] acceleration during COVID — that was our big trio,” he said.

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