Enterprise Data Intelligence Platform Alation has raised $123M in Series E funding. The money brings the total raised by the company to $340M and sees it now valued at $1.7B. That’s a jump of almost 50% on its previous valuation. It demonstrates the strength of the Data Intelligence Platform market and the growth of Alation. IDC puts the data integration and intelligence software market at more than $7.9B and growing to $11.6B over the next four years.
The company has had five consecutive quarters of growth. It has now surpassed $100M in annual recurring revenue (ARR), which will have interested investors. Most of the investors in this round also participated in earlier rounds. However, there were a few new investors.
This round was led by Thoma Bravo (new), Sanabil Investments (existing), and Costanoa Ventures (existing). Another new investor is Databricks Ventures. All the others named in the press release have invested in at least one previous round of funding, according to Crunchbase.
Satyen Sangani, CEO and co-founder, Alation, said, “The modern enterprise needs data in good times … and even more so in bad. In one of the most challenging times to raise capital, especially for late-stage SaaS companies, we sourced the capital needed to continue to grow the business.
“While negative volatility has many pre-IPO companies slashing valuations and halting investments, we defied the odds, raised $123 million, and increased our valuation. The confidence from our investors reinforces that Alation is the leading data intelligence platform and we are well positioned to capitalize on opportunities in our expanding market.”
Where is the money going?
The company says the money will “accelerate Alation’s growth and global expansion, while driving strategic product innovation as the demand for data intelligence platforms surges.” It goes on to highlight four areas where the money will be spent:
- Invest in R&D and acquisitions to expand our multi-tenant SaaS offering.
- Further expand our global workforce beyond the 700 Alationauts on the team today, spanning the US, EMEA, APAC, and LATAM regions.
- Grow our customer success organization to deliver the best customer experience in the market, with new representatives, engineers, and deployment experts, so customers can leverage new innovations instantly.
- Launch innovative new products and solutions to support our growing customer base of nearly 450 enterprises, including more than 25% of Fortune 100 companies.
The first three should be a given for any company raising money. The latter is more of a marketing statement aimed at customers and investors.
What do the investors think?
This is a challenging time to get investment from Venture Capital companies. To raise $123M and the company’s value to $1.7B is no mean feat. Alation also added new investors in this round. All of that makes this noteworthy.
Interestingly, Alation published a blog detailing interviews with the three lead investors. It makes for interesting reading. It shows that the investors did a good deal of due diligence, including customer conversations.
The positive feedback from customers was one of the reasons that Thoma Bravo invested. It also liked the focus of the management team on the business. Accelerating growth was also a key factor.
Tre Sayle, Thoma Bravo said, “For five quarters in a row, Alation has seen increasing year-over-year ARR growth. And that’s even in the midst of 2022, which has been a tumultuous year from a macro perspective. The company continued to deliver very, very solid results. That was very unique. We had not seen that in the broader intelligence & data governance market.”
Sayle’s comments carry particular weight especially given Thoma Bravo’s portfolio. It has several companies in this space under its ownership which means it knows how the market is working.
Greg Sands, Managing Director of Costanoa Ventures, also put the ability to grow as a key factor. “In the context of a turbulent, challenging market, the company is accelerating,” Sands exclaims. “And there just aren’t that many examples of companies accelerating during this time!”
Andrew Ferguson of Databrick Ventures espoused a different view. It, like Thoma Bravo, is making its first investment in Alation. His perspective was growth and how the company has become a data intelligence platform. Part of that transition has been the move to the cloud and the democratisation of data access.
Ferguson said, “It went from being really focused on data catalogs to becoming a much broader data intelligence platform – and one that’s cloud-native and therefore relevant for a much broader set of users within an enterprise, not just analysts or stewards, but all the way down to business users. We really like that ambition. And it aligns with our vision of also expanding the personas that are able to use the Databricks lakehouse within each enterprise.”
Enterprise Times: What does this mean?
Accelerating growth, ARR over $100M and a growing customer base make it easy to see why Alation was able to start a conversation with investors. More importantly, investors’ reaction to the current management and the strategy they’ve put in place is impressive. It bodes well for the company going forward should it need to look for future investments.
However, its success and the arrival of Thoma Bravo with its group of companies in this space also raise two questions. Will the company be able to continue on its own, or will it get acquired, either by Thoma Bravo, another VC or a competitor? How long before it considers an IPO?