Fivetran Grabs $100M, Heads for Data Lakes

Bigdata

By: Mary Jander

Fivetran, a startup specializing in porting data from existing enterprise sources to trendy cloud-based formats, has become a $1.2 billion “unicorn,” thanks in part to the momentum of remote work.

Fivetran announced July 1 a Series C funding round of $100 million, led by Andreessen Horowitz (aka a16z) and new investor General Catalyst. Returning contributors include CEAS Investments and Matrix Partners. The funds will go toward corporate expansion, including doubling employees in key locations, such as Dublin, Republic of Ireland, and in Bengaluru (aka Bangalore), India.

This round brings Fivetran’s total funding to about $163 million, and its valuation to $1.2 billion — nearly quadrupling its valuation of about $254 million in September 2019, when Fivetran scored $44 million in Series B funding led by a16z.

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Since that round, Fivetran claims to have widened its customer base by about 75% to a total number of about 1,100. The company says it now has 1,100 enterprise customers, including Conagra Brands, Forever21, Square, and Urban Outfitters, among others. And while not yet claiming profitability, the company has told news sources that for the fiscal year ended in May, annual recurring revenue grew 129%.

What Fivetran’s Pipelines Do

Fivetran offers its own software-as-a-service (SaaS) designed to extract data from a variety of sources on customer networks and pipes it over (via secure link) to a cloud-based data warehouse, data lake, or other data analysis tool (think Snowflake, RedShift, BigQuery), where it can be centralized and analyzed. The company’s mission is to offer “simple, reliable data integration for analytics teams…. Leave the engineering to us!”

That engineering refers to in-house extract, transform, and load (ETL) software, which can be cumbersome to maintain, but which remains in place for a lot of enterprises. Instead of wrangling data that way, Fivetran uses its own application programming interfaces (APIs) to connect to a range of data sources (Amazon DynamicDB, Google Analytics, MySQL on Azure, Salesforce, Oracle EBS, and the like). The vendor presently has over 150 connectors, with more on the way.

Pondering Fivetran's Future

Fivetran’s approach has a lot going for it — and sadly, part of its strength is coming from the COVID-19 crisis. Companies need to support work from home (WFH), while still energizing business processes. Cloud environments can offer these benefits — if done efficiently. How to achieve these links at every layer of cloud migration has been a challenge in which savvy startups are finding a rich potential market.

By following a trend toward API-based connections, some based on the popular representational state transfer (REST) approach, Fivetran has been able to generate workable and welcome solutions. But competition is increasing, most notably from Matillion, based in Manchester, U.K., with offices in New York, Denver, and Seattle; and Stitch, headquartered in Philadelphia and owned by Talend (Nasdaq: TLND), which has a roster of other data integration solutions.

But Fivetran, founded in 2012 by lifelong pals George Fraser (CEO, who also holds a Ph.D. in neurobiology) and Taylor Brown (COO), has made some great connections: It’s partnered with Snowflake, a data warehousing startup and unicorn in its own right funded in part by Salesforce (NYSE: CRM) that is said to be pondering an imminent IPO. While Matillion and Stitch also enjoy relationships with Snowflake, it’s likely that more successes among Snowflake and Salesforce customers could be a factor in Fivetran’s favor. At least, it could help the latest cloud unicorn run the race faster.