Personal blog of Yzmir Ramirez

Fivetran, the data connectivity startup, had a big day today. For starters it announced a $565 million investment on a $5.6 billion valuation, but it didn’t stop there. It also announced its second acquisition this year, snagging HVR, a data integration competitor that had raised more than $50 million, for $700 million in cash and stock.

The company last raised a $100 million Series C on a $1.2 billion valuation, increasing the valuation by over 5x. As with that Series C, Andreessen Horowitz was back leading the round, with participation from other double dippers General Catalyst, CEAS Investments, Matrix Partners and other unnamed firms or individuals. New investors ICONIQ Capital, D1 Capital Partners and YC Continuity also came along for the ride. The company reports it has now raised $730 million.

The HVR acquisition represents a hefty investment for the startup, grabbing a company for a price that is almost equal to all the money it has raised to date, but it provides a way to expand its market quickly by buying a competitor. Earlier this year Fivetran acquired Teleport Data as it continues to add functionality and customers via acquisition.

“The acquisition — a cash and stock deal valued at $700 million — strengthens Fivetran’s market position as one of the data integration leaders for all industries and all customer types,” the company said in a statement.

While that may smack of corporate marketing-speak, there is some truth to it, as pulling data from multiple sources, sometimes in siloed legacy systems, is a huge challenge for companies, and both Fivetran and HVR have developed tools to provide the pipes to connect various data sources and put it to work across a business.

Data is central to a number of modern enterprise practices, including customer experience management, which takes advantage of customer data to deliver customized experiences based on what you know about them, and data is the main fuel for machine learning models, which use it to understand and learn how a process works. Fivetran and HVR provide the nuts and bolts infrastructure to move the data around to where it’s needed, connecting to various applications like Salesforce, Box or Airtable, databases like Postgres SQL or data repositories like Snowflake or Databricks.

Whether bigger is better remains to be seen, but Fivetran is betting that it will be in this case as it makes its way along the startup journey. The transaction has been approved by both companies’ boards. The deal is still subject to standard regulatory approval, but Fivetran is expecting it to close in October.

French startup Skello has raised a $47.3 million funding round (€40 million). The company has been working on a software-as-a-service tool that lets you manage the work schedule of your company. What makes it special is that Skello automatically takes into account local labor laws and collective agreements.

Partech is leading today’s funding round. Existing investors XAnge and Aglaé Ventures are also participating. The startup had previously raised a €300,000 seed round and a €6 million Series A round in 2018.

Skello works with companies across many industries, such as retail, hospitality, pharmacies, bakeries, gyms, escape games and more. And many of them were simply using Microsoft Excel to manage their schedule.

By using Skello, you get an online service that works for both managers and employees. On the manager side, you can view who is working and when. You can assign employees to fill some gaps.

For employees, they can also connect to the platform to see their own schedule. Employees can also say when they are unavailable and request time off. And when something unexpected comes up, employees can trade shifts.

“We really want to put employees at the center of the product,” co-founder and CEO Quitterie Mathelin-Moreaux told me. “They have a mobile app and the idea is to make the work schedule as collaborative as possible in order to allocate resources as efficiently as possible and increase team retention.”

At every step of the scheduling process, Skello manages legal requirements. For instance, Skello remembers mandatory weekly rest periods. The platform knows that your employees can’t work across a long time range. And Skello can count overtime hours, holiday hours, Sunday shifts, etc.

When you’re approaching the end of the month, Skello can generate a report with everyone’s timesheet. You can integrate Skello directly with your payroll tool to make this process a bit less tedious as well.

Skello is currently used across 7,000 points of sale. Now, the company wants to expand to more European countries and increase the size of the team from 150 employees to 300 employees by 2022.

Every startup founder faces the same issue — how do you manage your cap table and equity plans in a transparent and lightweight manner? If you’re based in the U.S., chances are you’re using an equity management solution like Carta. But if you’re not based in the U.S., you don’t have a ton of options.

Ledgy wants to become the ownership management tool for the rest of the world. Based in Switzerland, several well-known European startups are already using Ledgy, such as Wefox, Kry, Bitpanda, Gorillas and Trade Republic.

The company recently closed a $10 million Series A funding round led by Sequoia Capital. Other investors in the round include Xavier Niel, Harry Stebbings, Visionaries Club, UiPath's Daniel Dines and Front's Mathilde Collin. Some of Ledgy’s existing investors also invested once again, such as Myke Näf, Paul Sevinç, btov Partners, Creathor Ventures and VI Partners.

A few years ago, when Ledgy co-founder and CEO Yoko Spirig talked with an entrepreneur, the founder showed her how he managed ownership. He opened an Excel spreadsheet and scrolled, scrolled, scrolled… “Each line represented a share. You can imagine how error-prone it is,” she told me.

While the implementation was odd, most companies in Europe are still using Excel spreadsheets to manage ownership. And Ledgy wants to convince those companies that switching to a software solution that has been specifically designed to solve this issue could be beneficial.

“The key has really been to focus on the software infrastructure. What we do is that we have implemented automation workflows that are adaptable depending on countries,” Spirig said. “We’re not focusing on one regulation and we’re really offering the infrastructure layer,” she added.

That’s why Ledgy already supports 32 countries. It has tweaked its product even more specifically for Germany, Austria and Switzerland. There will be more country-specific releases in the near future for startups based in the U.K. and France. 1,500 companies are using Ledgy right now.

When you switch to Ledgy, there are three main advantages. First, like other software-as-a-service products, Ledgy acts as a single source of truth for all stakeholders — the HR team, the finance team, investors, lawyers and employees.

The second selling point is that you can automate some of the most tedious tasks. For instance, Ledgy can automatically generate documents based on templates and different variables. Signed documents are stored on Ledgy. You can export data every quarter or every year for compliance reasons.

Third, it fosters transparency across the company. Employees can check the value of their options. They can see how much their options could be worth if the leadership team is in the process of raising a new round of funding.

With today’s funding round, Ledgy plans to expand into new markets. The company also plans to roll out support for public companies so that some of its existing customers can go public and keep using Ledgy.

The digital transformation currently sweeping society has likely reached your favorite local restaurant.

Since 2013, Boston-based Toast has offered bars and eateries a software platform that lets them manage orders, payments and deliveries.

Over the last year, its customers have processed more than $38 billion in gross payment volume, so Alex Wilhelm analyzed the company’s S-1 for The Exchange with great interest.

“Toast was last valued at just under $5 billion when it last raised, per Crunchbase data,” he writes. “And folks are saying that it could be worth $20 billion in its debut. Does that square with the numbers?”

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Airbnb, DoorDash and Coinbase each debuted at past Y Combinator Demo Days; as of this writing, they employ a combined 10,000 people.

Today and tomorrow, TechCrunch reporters will cover the proceedings at YC’s Summer 20201 Demo Day. In addition to writing up founder pitches, they’ll also rank their favorites.

Even remotely, I can feel a palpable sense of excitement radiating from our team — anything can happen at YC Demo Day, so sign up for Extra Crunch to follow the action.

Thanks very much for reading; I hope you have an excellent week.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

How Amazon EC2 grew from a notion into a foundational element of cloud computing

In August 2006, AWS activated its EC2 cloud-based virtual computer, a milestone in the cloud infrastructure giant’s development.

“You really can’t overstate what Amazon was able to accomplish,” writes enterprise reporter Ron Miller.

In the 15 years since, EC2 has enabled clients of any size to test and run their own applications on AWS’ virtual machines.

To learn more about a fundamental technological shift that “would help fuel a whole generation of startups,” Ron interviewed EC2 VP Dave Brown, who built and led the Amazon EC2 Frontend team.

3 ways to become a better manager in the work-from-home era

Most managers agree that OKRs foster transparency and accountability, but running a team effectively has different challenges when workers are attending all-hands meetings from their kitchen tables.

Instead of just discussing key metrics before board meetings or performance reviews, make them part of the day-to-day culture, recommends Jeremy Epstein, Gtmhub’s CMO.

“Strengthen your team by creating authentic workplace transparency using numbers as a universal language and providing meaning behind your team’s work.”

The pre-pitch: 7 ways to build relationships with VCs

Many founders must overcome a few emotional hurdles before they’re comfortable pitching a potential investor face-to-face.

To alleviate that pressure, Unicorn Capital founder Evan Fisher recommends that entrepreneurs use pre-pitch meetings to build and strengthen relationships before asking for a check:

“This is the ‘we actually aren’t looking for money; we just want to be friends for now’ pitch that gets you on an investor’s radar so that when it’s time to raise your next round, they’ll be far more likely to answer the phone because they actually know who you are.”

Pre-pitches are good for more than curing the jitters: These conversations help founders get a better sense of how VCs think and sometimes lead to serendipitous outcomes.

“Investors are opportunists by necessity,” says Fisher, “so if they like the cut of your business’s jib, you never know — the FOMO might start kicking hard.”

Lessons from COVID: Flexible funding is a must for alternative lenders

FischerJordan’s Deeba Goyal and Archita Bhandari break down the pandemic’s impact on alternative lenders, specifically what they had to do to survive the crisis, taking a look at smaller lenders including Credibly, Kabbage, Kapitus and BlueVine.

“Only those who were able to find a way through the complexities of their existing capital sources were able to maintain their performance, and the rest were left to perish or find new funding avenues,” they write.

Inside Freshworks’ IPO filing

Customer engagement software company Freshworks’ S-1 filing depicts a company that’s experiencing accelerating revenue growth, “a great sign for the health of its business,” reports Alex Wilhelm in this morning’s The Exchange.

“Most companies see their growth rates decline as they scale, as larger denominators make growth in percentage terms more difficult.”

Studying the company’s SEC filing, he found that “Freshworks isn’t a company where we need to cut it lots of slack, as we might with an adjusted EBITDA number. It is going public ready for Big Kid metrics.”

Databricks this morning confirmed earlier reports that it was raising new capital at a higher valuation. The data- and AI-focused company has secured a $1.6 billion round at a $38 billion valuation, it said. Bloomberg first reported last week that Databricks was pursuing new capital at that price.

The Series H was led by Counterpoint Global, a Morgan Stanley fund. Other new investors included Baillie Gifford, UC Investments and ClearBridge. A grip of prior investors also kicked in cash to the round.

The new funding brings Databricks’ total private funding raised to $3.5 billion. Notably, its latest raise comes just seven months after the late-stage startup raised $1 billion on a $28 billion valuation. Its new valuation represents paper value creation in excess of $1 billion per month.

The company, which makes open source and commercial products for processing structured and unstructured data in one location, views its market as a new technology category. Databricks calls the technology a data “lakehouse,” a mashup of data lake and data warehouse.

Databricks CEO and co-founder Ali Ghodsi believes that its new capital will help his company secure market leadership.

For context, since the 1980s, large companies have stored massive amounts of structured data in data warehouses. More recently, companies like Snowflake and Databricks have provided a similar solution for unstructured data called a data lake.

In Ghodsi’s view, combining structured and unstructured data in a single place with the ability for customers to execute data science and business-intelligence work without moving the underlying data is a critical change in the larger data market.

“[Data lakehouses are] a new category, and we think there’s going to be lots of vendors in this data category. So it’s a land grab. We want to quickly race to build it and complete the picture,” he said in an interview with TechCrunch.

Ghodsi also pointed out that he is going up against well-capitalized competitors and that he wants the funds to compete hard with them.

“And you know, it’s not like we’re up against some tiny startups that are getting seed funding to build this. It’s all kinds of [large, established] vendors,” he said. That includes Snowflake, Amazon, Google and others who want to secure a piece of the new market category that Databricks sees emerging.

The company’s performance indicates that it’s onto something.

Growth

Databricks has reached the $600 million annual recurring revenue (ARR) milestone, it disclosed as part of its funding announcement. It closed 2020 at $425 million ARR, to better illustrate how quickly it is growing at scale.

Per the company, its new ARR figure represents 75% growth, measured on a year-over-year basis.

That’s quick for a company of its size; per the Bessemer Cloud Index, top-quartile public software companies are growing at around 44% year over year. Those companies are worth around 22x their forward revenues.

At its new valuation, Databricks is worth 63x its current ARR. So Databricks isn’t cheap, but at its current pace should be able to grow to a size that makes its most recent private valuation easily tenable when it does go public, provided that it doesn’t set a new, higher bar for its future performance by raising again before going public.

Ghodsi declined to share timing around a possible IPO, and it isn’t clear whether the company will pursue a traditional IPO or if it will continue to raise private funds so that it can direct list when it chooses to float. Regardless, Databricks is now sufficiently valuable that it can only exit to one of a handful of mega-cap technology giants or go public.

Why hasn’t the company gone public? Ghodsi is enjoying a rare position in the startup market: He has access to unlimited capital. Databricks had to open another $100 million in its latest round, which was originally set to close at just $1.5 billion. It doesn’t lack for investor interest, allowing its CEO to bring aboard the sort of shareholder he wants for his company’s post-IPO life — while enjoying limited dilution.

This also enables him to hire aggressively, possibly buy some smaller companies to fill in holes in Databricks’ product roadmap, and grow outside of the glare of Wall Street expectations from a position of capital advantage. It’s the startup equivalent of having one’s cake and eating it too.

But staying private longer isn’t without risks. If the larger market for software companies was rapidly devalued, Databricks could find itself too expensive to go public at its final private valuation. However, given the long bull market that we’ve seen in recent years for software shares, and the confidence Ghodsi has in his potential market, that doesn’t seem likely.

There’s still much about Databricks’ financial position that we don’t yet know — its gross margin profile, for example. TechCrunch is also incredibly curious what all its fundraising and ensuing spending have done to near-term Databricks operating cash flow results, as well as how long its gross-margin adjusted CAC payback has evolved since the onset of COVID-19. If we ever get an S-1, we might find out.

For now, winsome private markets are giving Ghodsi and crew space to operate an effectively public company without the annoyances that come with actually being public. Want the same thing for your company? Easy: Just reach $600 million ARR while growing 75% year over year.

Copenhagen-based process automation platform Leapwork has snagged Denmark’s largest ever Series B funding round, announcing a $62 million raise co-led by KKR and Salesforce Ventures, with existing investors DN Capital and Headline also participating.

Also today it’s disclosing that its post-money valuation now stands at $312M. 

The ‘no code’ 2015-founded startup last raised back in 2019, when it snagged a $10M Series A. The business was bootstrapped through earlier years — with the founders putting in their own money, garnered from prior successful exits. Their follow on bet on ‘no code’ already looks to have paid off in spades: Since launching the platform in 2017, Leapwork has seen its customer base more than double year on year and it now has a roster of 300+ customers around the world paying it to speed up their routine business processes.

Software testing is a particular focus for the tools, which Leapwork pitches at enterprises’ quality assurance and test teams.

It claims that by using its ‘no code’ tech — a label for the trend which refers to software that’s designed to be accessible to non-technical staff, greatly increasing its utility and applicability — businesses can achieve a 10x faster time to market, 97% productivity gains, and a 90% reduction in application errors. So the wider pitch is that it can support enterprises to achieve faster digital transformations with only their existing mix of in-house skills. 

Customers include the likes of PayPal, Mercedes-Benz and BNP Paribas.

Leapwork’s own business, meanwhile, has grown to a team of 170 people — working across nine offices throughout Europe, North America and Asia.

The Series B funding will be used to accelerate its global expansion, with the startup telling us it plans to expand the size of its local teams in key markets and open a series of tech hubs to support further product development.

Expanding in North America is a big priority now, with Leapwork noting it recently opened a New York office — where it plans to “significantly” increase headcount.

“In terms of our global presence, we want to ensure we are as close to our customers as possible, by continuing to build up local teams and expertise across each of our key markets, especially Europe and North America,” CEO and co-founder Christian Brink Frederiksen tells TechCrunch. “For example, we will build up more expertise and plan to really scale up the size of the team based out of our New York office over the next 12 months.

“Equally we have opened new offices across Europe, so we want to ensure our teams have the scope to work closely with customers. We also plan to invest heavily in the product and the technology that underpins it. For example, we’ll be doubling the size of our tech hubs in Copenhagen and India over the next 12 months.”

Product development set to be accelerated with the chunky Series B will focus on enhancements and functionality aimed at “breaking down the language barrier between humans and computers”, as Brink Frederiksen puts it

“Europe and the US are our two main markets. Half of our customers are US companies,” he also tells us, adding: “We are extremely popular among enterprise customers, especially those with complex compliance set-ups — 40% of our customers come from enterprises banking, insurance and financial services.

“Having said that, because our solution is no-code, it is heavily used across industries, including healthcare and life sciences, logistics and transportation, retail, manufacturing and more.”

Asked about competitors — given that the no code space has become a seething hotbed of activity over a number of years — Leapwork’s initial response is coy, trying the line that its business is a ‘truly special snowflake’. (“We truly believe we are the only solution that allows non-technical everyday business users to automate repetitive computer processes, without needing to understand how to code. Our no-code, visual language is what really sets us apart,” is how Brink Frederiksen actually phrases that.)

But on being pressed Leapwork names a raft of what it calls “legacy players” — such as Tricentis, Smartbear, Ranorex, MicroFocus, Eggplant Software, Mabl and Selenium — as (also) having “great products”, while continuing to claim they “speak to a different audience than we do”.

Certainly Leapwork’s Series B raise speaks loudly of how much value investors are seeing here.

Commenting in a statement, Patrick Devine, director at KKR, said: “Test automation has historically been very challenging at scale, and it has become a growing pain point as the pace of software development continues to accelerate. Leapwork’s primary mission since its founding has been to solve this problem, and it has impressively done so with its powerful no-code automation platform.”

“The team at Leapwork has done a fantastic job building a best-in-class corporate culture which has allowed them to continuously innovate, execute and push the boundaries of their automation platform,” added Stephen Shanley, managing director at KKR, in another statement.

In a third supporting statement, Nowi Kallen, principal at Salesforce Ventures, added: “Leapwork has tapped into a significant market opportunity with its no-code test automation software. With Christian and Claus [Rosenkrantz Topholt] at the helm and increased acceleration to digital adoption, we look forward to seeing Leapwork grow in the coming years and a successful partnership.”

The proof of the no code ‘pudding’ is in adoption and usage — getting non-developers to take to and stick with a new way of interfacing with and manipulating information. And so far, for Leapwork, the signs are looking good.

Earlier today, spend management startup Ramp said it has raised a $300 million Series C that valued it $3.9 billion. It also said it was acquiring Buyer, a “negotiation-as-a-service” platform that it believes will help customers save money on purchases and SaaS products.

The round and deal were announced just a week after competitor Brex shared news of its own acquisition — the $50 million purchase of Israeli fintech startup Weav. That deal was made after Brex’s founders invested in Weav, which offers a “universal API for commerce platforms”.

From a high level, all of the recent deal-making in corporate cards and spend management shows that it’s not enough to just help companies track what employees are expensing these days. As the market matures and feature sets begin to converge, the players are seeking to differentiate themselves from the competition.

But the point of interest here is these deals can tell us where both companies think they can provide and extract the most value from the market.

Earning more by spending less

Let’s start with Ramp. Launched in 2019, the company is a relative newcomer in the spend management category. But by all accounts, it’s producing some impressive growth numbers. As our colleague Mary Ann Azevedo wrote this morning:

Since the beginning of 2021, the company says it has seen its number of cardholders on its platform increase by 5x, with more than 2,000 businesses currently using Ramp as their “primary spend management solution.” The transaction volume on its corporate cards has tripled since April, when its last raise was announced. And, impressively, Ramp has seen its transaction volume increase year over year by 1,000%, according to CEO and co-founder Eric Glyman.

Ramp’s focus has always been on helping its customers save money: It touts a 1.5% cashback reward for all purchases made through its cards, and says its dashboard helps businesses identify duplicitous subscriptions and license redundancies. Ramp also alerts customers when they can save money on annual vs. monthly subscriptions, which it says has led many customers to do away with established T&E platforms like Concur or Expensify.

All told, the company claims that the average customer saves 3.3% per year on expenses after switching to its platform — and all that is before it brings Buyer into the fold.

Cisco announced on Friday that it’s acquiring Israeli applications-monitoring startup Epsagon at a price pegged at $500 million. The purchase gives Cisco a more modern microservices-focused component for its growing applications-monitoring portfolio.

The Israeli business publication Globes reported it had gotten confirmation from Cisco that the deal was for $500 million, but Cisco would not confirm that price with TechCrunch.

The acquisition comes on top of a couple of other high-profile app-monitoring deals, including AppDynamics, which the company bought in 2018 for $3.7 billion, and ThousandEyes, which it nabbed last year for $1 billion.

With Epsagon, the company is getting a way to monitor more modern applications built with containers and Kubernetes. Epsagon’s value proposition is a solution built from the ground up to monitor these kinds of workloads, giving users tracing and metrics, something that’s not always easy to do given the ephemeral nature of containers.

As Cisco’s Liz Centoni wrote in a blog post announcing the deal, Epsagon adds to the company’s concept of a full-stack offering in their applications-monitoring portfolio. Instead of having a bunch of different applications monitoring tools for different tasks, the company envisions one that works together.

“Cisco’s approach to full-stack observability gives our customers the ability to move beyond just monitoring to a paradigm that delivers shared context across teams and enables our customers to deliver exceptional digital experiences, optimize for cost, security and performance and maximize digital business revenue,” Centoni wrote.

That experience point is particularly important because when an application isn’t working, it isn’t happening in a vacuum. It has a cascading impact across the company, possibly affecting the core business itself and certainly causing customer distress, which could put pressure on customer service to field complaints, and the site reliability team to fix it. In the worst case, it could result in customer loss and an injured reputation.

If the application-monitoring system can act as an early warning system, it could help prevent the site or application from going down in the first place, and when it does go down, help track the root cause to get it up and running more quickly.

The challenge here for Cisco is incorporating Epsagon into the existing components of the application-monitoring portfolio and delivering that unified monitoring experience without making it feel like a Frankenstein’s monster of a solution globbed together from the various pieces.

Epsagon launched in 2018 and has raised $30 million. According to a report in the Israeli publication, Calcalist, the company was on the verge of a big Series B round with a valuation in the range of $200 million when it accepted this offer. It certainly seems to have given its early investors a good return. The deal is expected to close later this year.

Marvell announced this morning it has reached an agreement to acquire Innovium for $1.1 billion in an all-stock deal. The startup, which raised over $400 million according to Crunchbase data, makes networking ethernet switches optimized for the cloud.

Marvell president and CEO Matt Murphy sees Innovium as a complementary piece to the $10 billion Inphi acquisition last year, giving the company, which makes copper-based chips, more ways to work across modern cloud data centers.

“Innovium has established itself as a strong cloud data center merchant switch silicon provider with a proven platform, and we look forward to working with their talented team who have a strong track record in the industry for delivering multiple generations of highly successful products,” Marvell CEO Matt Murphy said in a statement.

Innovium founder and CEO Rajiv Khemani, who will remain as an advisor post-close, told a familiar tale from a startup CEO being acquired, seeing the sale as a way to accelerate more quickly as part of a larger organization than it could on its own. “As we engaged with Marvell, it became clear that our data center optimized portfolio combined with Marvell’s scale, leading technology platform and complementary portfolio, can accelerate our growth and vision of delivering breakthrough switch silicon for the cloud and edge,” he wrote in a company blog post announcing the deal.

The company, which was founded in 2014, raised more than $143 million last year on a post-money valuation of $1.3 billion, according to PitchBook data. The question is, was this a reasonable deal for the company given that valuation?

No company wants to sell for less than it was last valued by its investors. In some cases, such deals can still be accretive for early backers of the selling concern, but not always. In this case TechCrunch is not privy to all the details of the Innovium cap table and what its later investors may have built into their deals with the company in the form of downside protection; such measures can tilt the value of the sale of a company more toward its later and final investors. This is usually managed at the expense of its earlier backers and employees.

Still, the Innovium deal should not be seen as a failure. Building a company that sells for north of $1 billion in equity value is impressive. The deal appears to be slightly smaller in enterprise value terms. In the business world, enterprise value is a useful method of valuing the true cost of an acquisition. In the case of Innovium, a large cash position, what was described as “Innovium cash and exercise proceeds expected at closing of approximately $145 million,” lowered the cost of the transaction to a more modest $955 million in net outlays.

Our general perspective is that the sale is probably not the outcome that Innovium’s backers had hoped for, but that it may still prove lucrative to early workers and early investors, and still works at that lower figure. It’s also notable how in today’s market of mega-rounds and surfeit unicorns, an exit north of the $1 billion mark in equity terms can be viewed as a disappointment in any terms. Innovium is selling for around the price that Facebook paid for Instagram in 2012, a deal that at the time was so large that it dominated technology headlines around the world.

But with so much capital available today, private valuations are soaring and mega deals abound. And recent rounds north of $100 million, much like Innovium’s 2020-era, $143 million round, can set companies up with rich valuations and a narrow path in front of them to beat those heightened expectations.

What likely happened? Perhaps Innovium found itself with more cash than opportunities to spend it; perhaps it simply needed a large partner to help it better sell into its market. With expected revenues of $150 million in Marvell’s fiscal 2023, its next fiscal period, Innovium did not fail to reach scale. It may have simply grown well as a private, independent company, and stalled out after its last round.

Regardless, a billion-dollar exit is a billion-dollar exit. The deal is expected to close by the end of this year. While both company boards have approved the deal, it still must clear regular closing hurdles, including approval by Innovium’s private stock holders.

Over the last couple of years, robotic process automation or RPA has been red hot with tons of investor activity and M&A from companies like SAP, IBM and ServiceNow. UIPath had a major IPO in April and has a market cap over $30 billion. I wondered when Salesforce would get involved and today the company dipped its toe into the RPA pool, announcing its intent to buy German RPA company Servicetrace.

Salesforce intends to make Servicetrace part of Mulesoft, the company it bought in 2018 for $6.5 billion. The companies aren’t divulging the purchase price, suggesting it’s a much smaller deal. When Servicetrace is in the fold, it should fit in well with Mulesoft’s API integration, helping to add an automation layer to Mulesoft’s tool kit.

“With the addition of Servicetrace, MuleSoft will be able to deliver a leading unified integration, API management and RPA platform, which will further enrich the Salesforce Customer 360 — empowering organizations to deliver connected experiences from anywhere. The new RPA capabilities will enhance Salesforce’s Einstein Automate solution, enabling end-to-end workflow automation across any system for service, sales, industries, and more,” Mulesoft CEO Brent Hayward wrote in a blog post announcing the deal.

While Einstein, Salesforce’s artificial intelligence layer, gives companies with more modern tooling the ability to automate certain tasks, RPA is suited to more legacy operations, and this acquisition could be another step in helping Salesforce bridge the gap between older on-prem tools and more modern cloud software.

Brent Leary, founder and principal analyst at CRM Essentials says that it brings another dimension to Salesforce’s digital transformation tools. “It didn’t take Salesforce long to move to the next acquisition after closing their biggest purchase with Slack. But automation of processes and workflows fueled by real-time data coming from a growing variety of sources is becoming a key to finding success with digital transformation. And this adds a critical piece to that puzzle for Salesforce/MuleSoft,” he said.

While it feels like Salesforce is joining the market late, in an investor survey we published in May, Laela Sturdy, general partner at CapitalG, told us that we are just skimming the surface so far when it comes to RPA’s potential.

“We’re a long way from needing to think about the space maturing. In fact, RPA adoption is still in its early infancy when you consider its immense potential. Most companies are only now just beginning to explore the numerous use cases that exist across industries. The more enterprises dip their toes into RPA, the more use cases they envision,” Sturdy responded in the survey.

Servicetrace was founded in 2004, long before the notion of RPA even existed. Neither Crunchbase nor PitchBook shows any money raised, but the website suggests a mature company with a rich product set. Customers include Fujitsu, Siemens, Merck and Deutsche Telekom.