Expanse
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Merge raises $4.5M to help B2B companies build customer-facing integrations
Merge, a startup that helps its users build customer-facing integrations with third-party tools, today announced that it has raised a $4.5 million seed round led by NEA. Additional angel investors include former MuleSoft CEO Greg Schott, Cloudflare CEO Matthew Prince, Expanse co-founders Tim Junio and Matt Kraning, and Jumpstart CEO Ben Herman.
Launched in 2020, the core focus of Merge is to give B2B companies a unified API to access data from what is currently about 40 HR, payroll, recruiting and accounting platforms, with plans for expanding to additional areas soon. But Merge co-founders Shensi Ding and Gil Feig, who have been lifelong friends and previously worked at companies like Expanse and Jumpstart, stress that the service isn’t aiming to replace workflow tools Workato or Zapier.
Image Credits: Merge
“What we built is more similar to Plaid than MuleSoft or other things,” Feig said. “We built a unified API, so we’re fully embedded in a customer’s product and they build one integration with us and can automatically offer all these integrations to their customers. On top of that, we offer what we call integrations management, which is a suite of tools to automatically detect issues where the customer would have to get involved — automatically detect that stuff and handle it without ever having to involve engineering again.”
When Merge’s systems detect issues with an integration, maybe because a data schema in an API response has changed without notice (which happens with some regularity), Merge’s engineers can fix that within minutes, in part because the teams also built an internal no-code tool for building and managing these integrations.
Image Credits: Merge
As Ding also noted, B2B buyers today also simply expect their tools to feature integrations with the service they use. “Companies, when they purchase a vendor, they expect that vendor to have integrations with all the other vendors that they own,” she said. “They don’t want to have to purchase a vendor and then purchase a workflow product and then connect those products.”
And while Merge’s focus right now is squarely on a few verticals, the plan is to expand this to far more areas shortly, likely starting with CRM. “Salesforce has a pretty large market share, so we thought that it wasn’t going to be as interesting of a market,” Ding said. “But it turns out that their API is so complex that customers would still prefer to integrate with us instead if we simplify it for them.”
Ding and Feig tell me the company, which came out of stealth about two months ago, already has about 100 organizations on its platform, varying from seed-stage companies to publicly listed enterprises. The team credits its focus on security and reliability (and its SOC II compliance) with being able to bring on some of these larger companies despite being a seed-stage company itself.
To monetize the service, Merge offers a free tier (up to 10,000 API requests per month) and charges $0.01 per API request for additional usage. Unsurprisingly, the company also offers customized enterprise plans for its larger customers.
“The time and expense associated with building and maintaining myriad API integrations is a pain point we hear about consistently from our portfolio companies across all industries,” said NEA managing general partner Scott Sandell, who will join the company’s board. “Merge is tackling this ubiquitous problem head-on via their easy-to-use, unified API platform. Their platform has broad applicability and is a massive upgrade for any software company that needs to build, manage, and maintain multiple API integrations.”
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Palo Alto Networks to acquire Expanse in deal worth $800M
Palo Alto Networks has been on a buying binge for the last couple of years, and today it added to its haul, announcing a deal to acquire Expanse for $800 million in cash and equity awards. The deal breaks down to $670 million in cash and stock and another $130 million in equity awards to Expanse employees.
Expanse provides a service to help companies understand and protect their attack surface, where they could be most vulnerable to attack. It works by giving the security team a view of how the company’s security profile could look to an attacker trying to gain access.
The plan is to fold Expanse into Palo Alto’s Cortex Suite, an AI-driven set of tools designed to detect and prevent attacks in an automated way. Expanse should provide Palo Alto with a highly valuable set of data to help feed the AI models.
“By integrating Expanse’s attack surface management capabilities into Cortex after closing, we will be able to offer the first solution that combines the outside view of an organization’s attack surface with an inside view to proactively address all security threats,” Palo Alto Networks chairman and CEO Nikesh Arora said in a statement.
Expanse sees the acquisition as a way to accelerate the company road map using the resources of a larger company like Palo Alto, a typical argument from companies being acquired. “Joining forces with Palo Alto Networks will let us achieve our most important business goals years ahead of schedule. During the course of conversations with Palo Alto Networks leadership, we shared optimism that the right combination of technology and people can solve many cybersecurity challenges that to date have seemed intractable,” the startup’s founders wrote in a blog post announcing the deal.
The two co-founders, Dr. Tim Junio and Dr. Matt Kraning, will be joining Palo Alto under the terms of the deal, which is expected to close in Palo Alto’s fiscal second quarter, assuming it passes regulatory muster.
Expanse was founded in 2012 and has raised $136 million, according to Crunchbase data. Its most recent raise was a $70 million Series C last year, which was led by TPG.
Today’s acquisition is Palo Alto’s third in 2020 and the 10th since 2018. Palo Alto stock was up 2.15% in early trading.
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Expanse, which lets its customers know when their digital assets aren’t safe, has raised $70 million in new funding
Expanse, a six-year-old, San Francisco-based company that helps its clients understand and monitor what it calls their “global internet attack surface,” has received a $70 million vote of confidence from its earlier backers, as well as some notable individual investors.
Previous investor TPG Growth led the Series C round, with participation from other earlier investors that include NEA, IVP and Founders Fund. But the company also drew checks directly from Founders Fund co-founder Peter Thiel, Michael Dell, former IBM CEO Sam Palmisano, media entrepreneur Arianna Huffington and Turner Enterprise CEO Taylor Glover.
What do they find so interesting about Expanse, which was formerly known as Qadium? Its traction, for starters. It turns out that when you start indexing global internet protocol addresses before everyone else — meaning the numerical labels assigned to each device connected to a computer network — it’s hard for competitors to catch up.
Indeed, numerous big organizations, including CVS and PayPal, are among others that now use the company’s software-as-a-service to help manage their far-flung digital assets connected to the public internet. According to co-founder and CEO Tim Junio, Expanse has been tripling its sales year over year — and quadrupling the terms of its contracts. Toward that end, he says it now has more than 10 customers that have signed up for $1 million-plus contracts. “VCs like to look at how long it takes to go from $1 million to $10 million in [annual recurring revenue]. It took us 22 months, about as fast as [the now-public cloud-storage company] Box.”
Much of that revenue is also coming from U.S. federal agencies, including the U.S. Army, the U.S. Navy and the U.S. Air Force, as well as the State Department, the Defense Department and the Department of Energy. Collectively, they account for more than $100 million in contracts with Expanse, it says.
Asked if Thiel has played a role in making introductions — Thiel famously advised Donald Trump leading up to his election as president, and Thiel’s former chief of staff, Michael Kratsios, is now the country’s chief technology officer — Junio says that all of Expanse’s investors have helped in making customer introductions and pours water on any suggestion that Thiel has done special favors for the company.
Meanwhile, though the company is known for its work in helping customers identify security risks they don’t know about on their networks — like an IoT device that hasn’t been patched — it’s now going after adjacent problems that are bigger-spend problems, including looking at its customers’ critical suppliers to be sure that they aren’t introducing vulnerabilities, including across their commercial cloud providers and co-hosting facilities.
Eventually, it’s easy to see a day when Expanse sells some of the aggregated data it’s seeing, perhaps on a sector by sector basis, though Junio says that Expanse “isn’t going in that direction” currently. For now, he says, the biggest trend that’s driving the business today is the digital transformation of every type of company, which is resulting in plenty of insecurity. As more businesses move to the cloud, there is always the danger that employees — their own or those acquired through mergers — won’t always know or follow policies, and that they’ll move sensitive data where they should not.
That it’s a trend with no end in sight goes a long way in explaining the momentum of Expanse. Already, the company has 150 employees across offices in San Francisco, Washington, DC, New York and Atlanta. With its newest round — a sum that brings Expanse’s total funding to $135 million altogether — the plan is partly to move into new international markets beyond where it already operates. Those markets include the U.K., Canada, Australia and Japan.
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