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Airbyte, a company that helps connect and integrate different kinds of data, is on track to become the next unicorn in the cloud.
Several sources told Autonews360 that Airbyte wanted to be worth between $1.5 billion and $1.6 billion. According to the sources, the funding round is happening while the company’s annual recurring revenue is less than $1 million. One person who knows about the matter says that crossover funds Coatue and Altimeter Capital are likely to invest in the round.
On Friday, the company told Forbes that it had closed a $150 million round of funding at a $1.5 billion valuation. Coatue and Altimeter led the investment. The round was also made up of Thrive Capital, Salesforce Ventures, Accel, and Benchmark. It wouldn’t talk about how much money it made.
Since it was started in January 2020 in San Francisco, the new business has moved at breakneck speed. After making changes to its business with the help of Y Combinator, Airbyte decided to make a product that makes it easier to move data. In February of this year, Accel led a seed round that brought in $5 million. In May, Benchmark led a Series A round that brought in $26 million. Airbyte says in its company handbook that its goal is “to become the open-source standard for the industry.”
Airbyte Valuation
In the field of data software, the open source model, which turns a free-to-use core offering into a full product suite that can be sold, is becoming more and more popular. GitLab, Confluent, and HashiCorp are all open source companies that have gone public in the past few months. Databricks, the largest data analytics startup (valued at $38 billion), also started as an open source project. Investors have shown that they are willing to put money into companies that use open source well, even if they don’t make much money. For example, Anyscale recently raised money at a $1 billion valuation, even though its annual recurring revenue was said to be less than $5 million.
Airbyte’s open source project works in the market for data integration, which means bringing together different types of data from different sources, like Facebook and technical databases like MySQL, so that they can be used for things like analytics or predictive modeling.
Integration of data is a key part of the modern data stack, which is a set of cloud-based tools for storing and using large amounts of data. Fivetran, a rival data integration company that has been a unicorn since June 2020, gives Airbyte a lot of trouble. Fivetran, which is not open-source, raised $565 million in September and said it had bought HVR, another company that works with data integration, for $700 million.
Forbes quotes co-founder John Lafleur as saying that he thinks data integration can be a market where the leader gets at least 80% of the market. He says that in the long run, the product with the most ways for users to connect data from different sources will win. Airbyte thinks that its open-source nature brings together the users who are needed to make these connectors.
Both Airbyte and Fivetran offer about 150 data connectors right now, but Airbyte plans to have 500 by the end of next year. It will do this by using a revenue-sharing model to pay its users to help make the connectors. “You won’t be able to get to all of that data unless you have a community of people who can actually extend your platform,” says co-founder and CEO Michel Tricot.
The new funding for Airbyte is another sign that the modern data stack is full of hype. Forbes said on Wednesday that Dbt Labs, a startup for transforming data, is looking for funding at a valuation of at least $6 billion. Both rounds of fundraising come right after the last one. Airbyte raised $26 million at a valuation of $123 million in May, and Dbt Labs raised $150 million at a valuation of $1.5 billion in June. One source told Forbes, “There’s no way to use the kinds of capital they’re raising in the time frames they’re raising it in.”
In the past few months, it has been clear that people want to go to space. Snowflake is the market leader in data warehouse software, which is the most important part of the data stack. Its market capitalization is more than $100 billion.
Its stock price is about 45% higher than when it went public in September 2020, even though it faces more competition from companies like Data bricks, which was last valued at $38 billion, and cloud giants like Amazon and Microsoft, which are building similar warehouse products. On the private market, companies have also been met with a lot of interest. For example, in recent funding rounds, the data integration startup Fivetran was valued at $5.6 billion and the data analytics firm Thought Spot was valued at $4.2 billion.
For Airbyte, the funds could mean that the competition with Fivetran to get a piece of the data integration market is heating up. In other parts of the data space, the stockpiling of capital is clear. Tristan Handy, CEO of Dbt Labs, wrote in a blog post about the company’s June funding round that the company had decided to “raise more money and build data product fast” instead of “hoping that our current products and roadmap velocity are defensible enough to create a lasting independent business.” In the same market as Airbyte, the startup Stitch was bought by Talend for $60 million in 2018. In March, software-focused private equity firm Thoma Bravo bought Talend for $2.4 billion.
Airbyte’s next step is to aggressively grow its business, bringing the number of employees from 30 to 200 and putting its software on the market for everyone to use. Lafleur says that the cloud-based product is “by far the most requested feature,” with 1,500 companies ready to help Airbyte start making money. “Most businesses don’t want to host and run Airbyte themselves.” It’s fine if you only have five connectors, but most businesses need 20, 50, or 100 connectors, which makes it impossible.
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