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CloudBolt announces $35M Series B debt/equity investment to help manage hybrid cloud
CloudBolt, a Bethesda, Maryland startup that helps companies manage hybrid cloud environments, announced a $35 million Series B investment today. It was split between $15 million in equity investment and $20 million in debt.
Insight Partners provided the equity side of the equation, while Hercules Capital and Bridge Bank supplied the venture debt. The company has now raised more than $61 million in equity and debt, according to Crunchbase data.
CEO Jeff Kukowski says that his company helps customers with cloud and DevOps management including cost control, compliance and security. “We help [our customers] take advantage of the fact that most organizations are already hybrid cloud, multi cloud and/or multi tool. So you have all of this innovation happening in the world, and we make it easier for them to take advantage of it,” he said.
As he sees it, the move to cloud and DevOps, which was supposed to simplify everything, has actually created new complexity, and the tools his company sells are designed to help companies reduce some of that added complexity. What they do is provide a way to automate, secure and optimize their workloads, regardless of the tools or approach to infrastructure they are using.
The company closed the funding round at the end of last quarter and put it to work with a couple of acquisitions — Kumolus and SovLabs — to help accelerate and fill in the road map. Kumolus, which was founded in 2011 and raised $1.7 million, according to Crunchbase, really helps CloudBolt extend its vision from managing on premises to the public cloud.
SovLabs was an early-stage startup working on a very specific problem creating a framework for extending VMware automation.
CloudBolt currently has 170 employees. While Kukowski didn’t want to get specific about the number of additional employees he might be adding to that in the next 12 months, he says that as he does, he thinks about diversity in three ways.
“One is just pure education. So we as a company regularly meet and educate on issues around inclusion, social justice and diversity. We also recruit with those ideas in mind. And then we also have a standing committee within the company that continues to look at issues not only for discussion, but quite frankly for investment in terms of time and fundraising,” he said.
Kukowski says that going remote because of COVID has allowed the company to hire from anywhere, but he still looks forward to a time when he can meet face-to-face with his employees and customers, and sees that as always being part of his company’s culture.
CloudBolt was founded in 2012 and has around 200 customers. Kukowski says that the company is growing between 40% and 50% year over year, although he wouldn’t share specific revenue numbers.
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In the shadow of Amazon and Microsoft, Seattle startups are having a moment
Venture capital investment exploded across a number of geographies in 2019 despite the constant threat of an economic downturn.
San Francisco, of course, remains the startup epicenter of the world, shutting out all other geographies when it comes to capital invested. Still, other regions continue to grow, raking in more capital this year than ever.
In Utah, a new hotbed for startups, companies like Weave, Divvy and MX Technology raised a collective $370 million from private market investors. In the Northeast, New York City experienced record-breaking deal volume with median deal sizes climbing steadily. Boston is closing out the decade with at least 10 deals larger than $100 million announced this year alone. And in the lovely Pacific Northwest, home to tech heavyweights Amazon and Microsoft, Seattle is experiencing an uptick in VC interest in what could be a sign the town is finally reaching its full potential.
Seattle startups raised a total of $3.5 billion in VC funding across roughly 375 deals this year, according to data collected by PitchBook. That’s up from $3 billion in 2018 across 346 deals and a meager $1.7 billion in 2017 across 348 deals. Much of Seattle’s recent growth can be attributed to a few fast-growing businesses.
Convoy, the digital freight network that connects truckers with shippers, closed a $400 million round last month bringing its valuation to $2.75 billion. The deal was remarkable for a number of reasons. Firstly, it was the largest venture round for a Seattle-based company in a decade, PitchBook claims. And it pushed Convoy to the top of the list of the most valuable companies in the city, surpassing OfferUp, which raised a sizable Series D in 2018 at a $1.4 billion valuation.
Convoy has managed to attract a slew of high-profile investors, including Amazon’s Jeff Bezos, Salesforce CEO Marc Benioff and even U2’s Bono and the Edge. Since it was founded in 2015, the business has raised a total of more than $668 million.
Remitly, another Seattle-headquartered business, has helped bolster Seattle’s startup ecosystem. The fintech company focused on international money transfer raised a $135 million Series E led by Generation Investment Management, and $85 million in debt from Barclays, Bridge Bank, Goldman Sachs and Silicon Valley Bank earlier this year. Owl Rock Capital, Princeville Global, Prudential Financial, Schroder & Co Bank AG and Top Tier Capital Partners, and previous investors DN Capital, Naspers’ PayU and Stripes Group also participated in the equity round, which valued Remitly at nearly $1 billion.
Up-and-coming startups, including co-working space provider The Riveter, real estate business Modus and same-day delivery service Dolly, have recently attracted investment too.
A number of other factors have contributed to Seattle’s long-awaited rise in venture activity. Top-performing companies like Stripe, Airbnb and Dropbox have established engineering offices in Seattle, as has Uber, Twitter, Facebook, Disney and many others. This, of course, has attracted copious engineers, a key ingredient to building a successful tech hub. Plus, the pipeline of engineers provided by the nearby University of Washington (shout-out to my alma mater) means there’s no shortage of brainiacs.
There’s long been plenty of smart people in Seattle, mostly working at Microsoft and Amazon, however. The issue has been a shortage of entrepreneurs, or those willing to exit a well-paying gig in favor of a risky venture. Fortunately for Seattle venture capitalists, new efforts have been made to entice corporate workers to the startup universe. Pioneer Square Labs, which I profiled earlier this year, is a prime example of this movement. On a mission to champion Seattle’s unique entrepreneurial DNA, Pioneer Square Labs cropped up in 2015 to create, launch and fund technology companies headquartered in the Pacific Northwest.
Boundless CEO Xiao Wang at TechCrunch Disrupt 2017
Operating under the startup studio model, PSL’s team of former founders and venture capitalists, including Rover and Mighty AI founder Greg Gottesman, collaborate to craft and incubate startup ideas, then recruit a founding CEO from their network of entrepreneurs to lead the business. Seattle is home to two of the most valuable businesses in the world, but it has not created as many founders as anticipated. PSL hopes that by removing some of the risk, it can encourage prospective founders, like Boundless CEO Xiao Wang, a former senior product manager at Amazon, to build.
“The studio model lends itself really well to people who are 99% there, thinking ‘damn, I want to start a company,’ ” PSL co-founder Ben Gilbert said in March. “These are people that are incredible entrepreneurs but if not for the studio as a catalyst, they may not have [left].”
Boundless is one of several successful PSL spin-outs. The business, which helps families navigate the convoluted green card process, raised a $7.8 million Series A led by Foundry Group earlier this year, with participation from existing investors Trilogy Equity Partners, PSL, Two Sigma Ventures and Founders’ Co-Op.
Years-old institutional funds like Seattle’s Madrona Venture Group have done their part to bolster the Seattle startup community too. Madrona raised a $100 million Acceleration Fund earlier this year, and although it plans to look beyond its backyard for its newest deals, the firm continues to be one of the largest supporters of Pacific Northwest upstarts. Founded in 1995, Madrona’s portfolio includes Amazon, Mighty AI, UiPath, Branch and more.
Voyager Capital, another Seattle-based VC, also raised another $100 million this year to invest in the PNW. Maveron, a venture capital fund co-founded by Starbucks mastermind Howard Schultz, closed on another $180 million to invest in early-stage consumer startups in May. And new efforts like Flying Fish Partners have been busy deploying capital to promising local companies.
There’s a lot more to say about all this. Like the growing role of deep-pocketed angel investors in Seattle have in expanding the startup ecosystem, or the non-local investors, like Silicon Valley’s best, who’ve funneled cash into Seattle’s talent. In short, Seattle deal activity is finally climbing thanks to top talent, new accelerator models and several refueled venture funds. Now we wait to see how the Seattle startup community leverages this growth period and what startups emerge on top.
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Grasshopper’s Judith Erwin leaps into innovation banking
In the years following the financial crisis, de novo bank activity in the US slowed to a trickle. But as memories fade, the economy expands and the potential of tech-powered financial services marches forward, entrepreneurs have once again been asking the question, “Should I start a bank?”
And by bank, I’m not referring to a neobank, which sits on top of a bank, or a fintech startup that offers an interesting banking-like service of one kind or another. I mean a bank bank.
One of those entrepreneurs is Judith Erwin, a well-known business banking executive who was part of the founding team at Square 1 Bank, which was bought in 2015. Fast forward a few years and Erwin is back, this time as CEO of the cleverly named Grasshopper Bank in New York.
With over $130 million in capital raised from investors including Patriot Financial and T. Rowe Price Associates, Grasshopper has a notable amount of heft for a banking newbie. But as Erwin and her team seek to build share in the innovation banking market, she knows that she’ll need the capital as she navigates a hotly contested niche that has benefited from a robust start-up and venture capital environment.
Gregg Schoenberg: Good to see you, Judith. To jump right in, in my opinion, you were a key part of one of the most successful de novo banks in quite some time. You were responsible for VC relationships there, right?
…My background is one where people give me broken things, I fix them and give them back.
Judith Erwin: The VC relationships and the products and services managing the balance sheet around deposits. Those were my two primary roles, but my background is one where people give me broken things, I fix them and give them back.
Schoenberg: Square 1 was purchased for about 22 times earnings and 260% of tangible book, correct?
Erwin: Sounds accurate.
Schoenberg: Plus, the bank had a phenomenal earnings trajectory. Meanwhile, PacWest, which acquired you, was a “perfectly nice bank.” Would that be a fair characterization?
Erwin: Yes.
Schoenberg: Is part of the motivation to start Grasshopper to continue on a journey that maybe ended a little bit prematurely last time?
Erwin: That’s a great insight, and I did feel like we had sold too soon. It was a great deal for the investors — which included me — and so I understood it. But absolutely, a lot of what we’re working to do here are things I had hoped to do at Square 1.
Image via Getty Images / Classen Rafael / EyeEm
Schoenberg: You’re obviously aware of the 800-pound gorilla in the room in the form of Silicon Valley Bank . You’ve also got the megabanks that play in the segment, as well as Signature Bank, First Republic, Bridge Bank and others.
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Optimizely raises $50M Series D round for its experimentation platform
Optimizely, a platform that offers tools for A/B testing and personalization on the web and in mobile apps, today announced that it has raised a total of $105 million. This includes a $50 million Series D round led by Goldman Sachs Private Capital, with the participation of Accenture Ventures, as well as a $55 million line of credit from Bridge Bank.
Goldman Sachs’s Michael Kondoleon will join Optimizely’s board of directors as a board member.
“We’re excited to reach this milestone because these investments cement our leadership position in the market,” Optimizely CEO Jay Larson told me. “We can invest more in products to put an even bigger gap between Optimizely and our competition. We can expand geographically. And we will continue to grow our team of world-class digital optimization experts. This is a big day for Optimizely and a big day for the experimentation and personalization industry.”
The company notes that about a quarter of the Fortune 100 currently use its services. The company says it now handles more than 6 billion events a day and that its customers have tripled their investments in digital experience optimization in the last two years. Current customers include the likes of Gap, Visa, IBM, StubHub, Metromile, Lending Club and Sonos.
In total, Optimizely has now raised more than $200 million, excluding the line of credit. The additional $55 million from Bridge Bank is a bit unusual, but not completely out of the ordinary for companies at this stage. “Bridge Bank is proud to continue working with Optimizely, a global leader at the forefront of the digital experience optimization market,” said Mike Lederman, senior vice president and western region director of Bridge Bank’s technology banking group. “Optimizely is on a path of substantial growth and the additional capital will help them continue to build market-leading products that are used by an increasing number of top global brands.”
As is pretty much standard for companies at this stage, Optimizely will use the new funding to drive growth.
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