Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Birst Is Bursting Out All Over, With $26 Million in Funding From Sequoia

Remember Birst? The first two letters of its name stand for Business Intelligence, and when I last looked in on this start-up, it had just announced a Business Intelligence appliance.

Today, Birst will announce that it has taken a $26 million round of funding led by Sequoia Capital. It is Birst’s fourth round of funding, and existing investors including Hummer Winblad and DAG Ventures are also participating, but it’s not a traditional Series D. Sequoia is investing with its Growth Fund, and that creates a slightly different investment dynamic, Doug Leone, a Sequoia Capital partner, told me.

Here’s what happened: Sequoia had already invested in Birst with its Venture fund. But over the last year or so, Leone started seeing something interesting. Companies that Leone is involved with, either as an investor or as a director — specifically Aruba Networks and Rackspace — had selected Birst after a business-intelligence bake-off versus other vendors. As a director of those two companies, he was able to see the close-up evaluation they did in making their selection.

On top of that, Leone noticed that Birst kept bringing in more customers per quarter, and that those customers were putting ever more dollars on the table. “We decided to make a preemptive offer with our Growth Equity Fund,” Leone told AllThingsD yesterday. “We saw what we thought was the knee of the curve. We saw quite clearly that we were at the beginning of a phase of hypergrowth for this company.”

The main difference between the venture-capital and growth-equity investments is that growth investments are made in companies that have growing revenue and a proven business model, whereas VC investments are made in start-ups that are just getting off the ground. It’s sort of a statement of faith in where Birst appears to be going. “It’s like a later-stage investment. It’s the last money the company is going to need.”

It’s not a small statement, either. This $26 million round is bigger than its previous three rounds combined, and brings its total capital raised to $46 million.

So what’s it going to do with all that money? CEO Brad Peters said he’s seeing a significant acceleration. Customers like the flexibility of a cloud-type BI solution, even if it’s running on-premise. “We need to get Birst out there. We need to build our sales organization, we need to build our distribution channel.” He also said a big announcement around infrastructure is pending, in order to better help Birst — his words — “catch the big-data wave.”

And will it join the parade of companies going public after Facebook? Not right away, Peters said. “We’re on that trajectory, but it won’t happen this year, or probably next. Maybe just after that,” he told me. “We’re building this to be a standalone, independent company.”

The textbook case for BI is comparing data on marketing spend to deals. If you find you’re spending a lot of money on one type of marketing campaign that seems not to be generating leads and deals, and not enough on one that seems to be working better, you can see the pattern and make needed changes. It’s all about synthesizing raw data and turning it into information you can make a decision on, Peters told me last year.

There’s a lot of venture-capital money flowing into young BI companies. Both Good Data and Domo have raised a lot on their own, and there are probably other companies I haven’t thought of, not to mention the large software players like Oracle and SAP, who do business intelligence, and IBM, which tends to favor the word “analytics” over “business intelligence.” Hewlett-Packard’s Autonomy business unit could also arguably be considered a business-intelligence outfit. Given all that activity, it just might be intelligent to to keep watching this business.


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