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Lightspeed’s Gaurav Gupta and Grafana’s Raj Dutt discuss pitch decks, pricing and how to nail the narrative
Before he was a partner at Lightspeed Venture Partners, Gaurav Gupta had his eye on Grafana Labs, the company that supports open-source analytics platform Grafana. But Raj Dutt, Grafana’s co-founder and CEO, played hard to get.
This week on Extra Crunch Live, the duo explained how they came together for Grafana’s Series A — and eventually, its Series B. They also walked us through Grafana’s original Series A pitch deck before Gupta shared the aspects that stood out to him and how he communicated those points to the broader partnership at Lightspeed.
Gupta and Dutt also offered feedback on pitch decks submitted by audience members and shared their thoughts about what makes a great founder presentation, pulling back the curtain on how VCs actually consume pitch decks.
We’ve included highlights below as well as the full video of our conversation.
We record new episodes of Extra Crunch Live each Wednesday at 12 p.m. PST/3 p.m. EST/8 p.m. GMT. Check out the February schedule here.
Episode breakdown:
- How they met — 2:20
- Grafana’s early pitch deck — 12:25
- The enterprise ecosystem — 26:00
- The pitch deck teardown — 33:00
How they met
As soon as Gupta joined Lightspeed in June 2019, he began pursuing Dutt and Grafana Labs. He texted, called and emailed, but he got little to no response. Eventually, he made plans to go meet the team in Stockholm but, even then, Dutt wasn’t super responsive.
The pair told the story with smiles on their faces. Dutt said that not only was he disorganized and not entirely sure of his own travel plans to see his co-founder in Stockholm, Grafana wasn’t even raising. Still, Gupta persisted and eventually sent a stern email.
“At one point, I was like ‘Raj, forget it. This isn’t working’,” recalled Gupta. “And suddenly he woke up.” Gupta added that he got mad, which “usually does not work for VCs, by the way, but in this case, it kind of worked.”
When they finally met, they got along. Dutt said they were able to talk shop due to Gupta’s experience inside organizations like Splunk and Elastic. Gupta described the trip as a whirlwind, where time just flew by.
“One of the reasons that I liked Gaurav is that he was a new VC,” explained Dutt. “So to me, he seemed like one of the most non-VC VCs I’d ever met. And that was actually quite attractive.”
To this day, Gupta and Dutt don’t have weekly standing meetings. Instead, they speak several times a week, conversing organically about industry news, Grafana’s products and the company’s overall trajectory.
Grafana’s early pitch deck
Dutt shared Grafana’s pre-Series A pitch deck — which he actually sent to Gupta and Lightspeed before they met — with the Extra Crunch Live audience. But as we know now, it was the conversations that Dutt and Gupta had (eventually) that provided the spark for that deal.
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India’s Zetwerk raises $120 million to scale its B2B marketplace for manufacturing parts
When you want to buy a refrigerator or a television, you can walk to the nearby electronics store or visit an e-commerce website like Amazon. But where do you go when you’re looking for parts of a crane, a door or chassis of different machines?
For several businesses globally, the answer to that question is increasingly Zetwerk, a Bangalore-based startup.
The three-year-old startup runs a business-to-business marketplace for manufacturing items that connects OEMs (original equipment manufacturers) and EPC (engineering procurement construction) customers with manufacturing small-businesses and enterprises.
All the products it sells today are custom-made. “Nobody has a stock of such inventories. You get the order, you find manufacturers and workshops that make them,” explained Amrit Acharya, co-founder and chief executive of Zetwerk, in an interview with TechCrunch.
Its customers — there are over 250 of them, up from 100 a year ago — operate across two-dozen industries (including process plants, oil & gas, steel, aerospace, medical devices, apparel and luxury goods) in the infrastructure space, and approach Zetwerk with digital designs they wish to be translated into physical products.
Customers aren’t alone in seeing value in Zetwerk. On Wednesday, the Indian startup said it has raised $120 million in a Series D financing round led by existing investors Greenoaks Capital and Lightspeed Venture Partners. Existing investors Sequoia Capital and Kae Capital also participated in the Series D round.
The new round, which brings Zetwerk’s to-date raise to $193 million, gives the firm a post-money valuation of somewhere between $600 million to $700 million, a person familiar with the matter told TechCrunch. (A quick side note: Zetwerk announced a $21 million Series C round last year, but ended up raising $31 million in that round.)
Zetwerk was co-founded by Acharya, Srinath Ramakkrushnan, Rahul Sharma and Vishal Chaudhary. Long before Acharya and Ramakkrushnan joined forces to tackle this space, they had been contemplating this idea.
Both of them studied at IIT Madras, went to the same exchange program in Singapore, and were colleagues at Kolkata-headquartered conglomerate ITC. While working there, they realized that part of a product manager’s job at the firm was dealing with gazillions of suppliers and the manufacturing items they offered.
The process was archaic: There were no databases, and people couldn’t track shipments.
The early version of Zetwerk, which was a database of suppliers, was a direct response to this. But after listening to requests from customers, the startup saw a bigger opportunity and transformed itself into a full-fledged marketplace with integrations with third-party vendors. Once a firm has placed an order, Zetwerk allows them to keep tabs on the progress of manufacturing and then the shipping. There are also quality checks in place.
Zetwerk website
Zetwerk operates in such a unique space today — Shailesh Lakhani, managing director at Sequoia India, says the startup has defined a new category of marketplace — that by and large it’s not competing with any other firm in India — or South Asia. (The startup competes with domain project consultants in the offline world.)
The opportunity in India itself is gigantic. According to industry reports, manufacturing today accounts for 14% of India’s GDP. Vaibhav Agarwal, a partner at Lightspeed, estimates that the market is as large as $40 billion to $60 billion in India and global trade-tailwinds that creates opportunity to serve international demand.
As more and more companies expand or shift their manufacturing to India — in part due to import duties imposed by India and geo-political tension with China, the global hub for manufacturing — this opportunity has only grown bigger in recent years.
“India has a lot of depth in manufacturing, but much of it has not been tapped well,” said Acharya.
Zetwerk — which grew 3X last year and reported revenue of $43.9 million in the financial year that ended in March, a 20X growth from the year prior — plans to deploy the new capital to expand to more areas of categories, and broaden its technology stack. Consumer goods (which covers items such as mixer grinders and TVs) is an area Zetwerk expanded to last year, and said it accounts for 15% of the revenue it generated in the last six months.
Currently 25 of its customers are in the U.S., Canada, Europe and other international markets. Acharya said the startup plans to open offices overseas this year as it scouts for more international customers.
“We are excited to partner with Zetwerk on the next leg of their journey, as they expand their value proposition globally. Zetwerk’s operating system for manufacturing has digitized multiple supply chains end-to-end, ensuring on-time delivery and high quality standards. This has led to rapid growth in India and internationally, with the potential to quickly become one of the most important manufacturing platforms globally,” said Neil Shah, partner at Greenoaks Capital, in a statement.
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Lightspeed’s Gaurav Gupta and Grafana Labs’ Raj Dutt will tell us why they financially tied the knot (twice!)
Many founders only know their own experience fundraising and don’t hear much about what other founders went through. On Extra Crunch Live on Wednesday, we’re going to remedy that.
Grafana Labs has raised upward of $75 million since it launched in 2014. Lightspeed Venture Partners, and partner Gaurav Gupta to be specific, led both the startup’s Series A and Series B rounds. As far as commitments go, that’s a pretty significant one.
The new and improved Extra Crunch Live pairs founders and the investors who led their earlier rounds to talk about how the deal went down, from the moment they met to the conversations they had (including some disagreements) to the relationship as it exists today. Hell, we may even take a peek at the original pitch deck that made it all happen.
Then, we’ll turn our eyes back to you, the audience. That same founder/investor duo (in this case, Grafana Labs CEO Raj Dutt and LVP’s Gaurav Gupta) will take a look at your pitch decks and give their own feedback. (If you haven’t yet submitted a pitch deck to be torn down on Extra Crunch Live, you can do so here.)
The hour-long episode is sandwiched between two 30-minute rounds of networking. From start to finish, it goes from 11:30 a.m. PST/2:30 p.m. EST to 1:30 p.m. PST/4:30 p.m. EST. And Extra Crunch Live will come to you at the same time, every week, with a new pair of speakers.
So let’s learn a little bit more about Gupta and Dutt.
Before becoming an investor, Gupta enjoyed a rich career in the product development sphere, holding positions at Elastic (where he led product management), Splunk (VP of Products), as well as Google, Gateway and the McKenna Group. He joined Lightspeed in 2019 as a partner, focusing primarily on enterprise software. He’s led investments in Impira, Blameless, Hasura and Panther, and of course, Grafana. He sits on the board of the last three companies in that list.
Dutt is the co-founder and CEO at Grafana Labs, but the fast-growing company isn’t his first go at entrepreneurialism. Dutt also founded and led Voxel, a cloud-hosting startup that was acquired by Internap for $30 million in 2012.
We’re absolutely thrilled to have Gupta and Dutt join us on our first episode of Extra Crunch Live in 2021. As a reminder, Extra Crunch Live is for Extra Crunch members only. We’re coming to you with a new pair of speakers every week, and you can catch everything you missed on-demand if you can’t join us live. It’s worth the cost of the subscription on its own, but EC members also get access to our premium content, including market maps and investor surveys. Long story short? Subscribe, smarty. You won’t regret it.
Oh, and here’s a look at other speakers you can expect to see on Extra Crunch Live:
Aydin Senkut (Felicis) + Kevin Busque (Guideline) — February 10
Steve Loughlin (Accel) + Jason Boehmig (Ironclad) — February 17
Matt Harris (Bain Capital Ventures) + Isaac Oates (Justworks) — February 24
And that’s just the February slate!
All the details to register for this upcoming episode (and more) are available below. Can’t wait to see you there!
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Vectorized announces $15.5M investment to build simpler streaming data tool
Streaming data is not new. Kafka has existed as an open source tool for a decade. Vectorized was founded on the premise that the existing tools were too complex and not designed for today’s streaming requirements. Today the company released its first product, Redpanda, an open source tool designed to make it easier for developers to build streaming data applications.
While it was at it, the startup announced a $15.5 million funding round, which is actually a combination of a previously unannounced $3 million seed round led by Lightspeed Venture Partners and a $12.5 million Series A, which was also from Lightspeed with help from Google Ventures.
Redpanda is an open source tool that is delivered as an “intelligent API” to help “turn data streams into products,” company founder and CEO Alexander Gallego explained. It’s built to be a Kafka replacement, while remaining Kafka-compatible to help deal with backwards compatibility.
At the same time, it takes a more modern approach. Gallego points out that teams building data streaming applications have been getting lost in the complexity and he recognized an opportunity to build a company to simplify that.
“People are drowning in complexity today managing Kafka, ZooKeeper (an open source configuration management tool) and the data lake,” he said, adding “We enable new things that couldn’t be done before for several reasons: one is performance, one is simplicity and the other one is this store procedures.”
He says that the key to developer adoption is making the product free through open source, and having Kafka compatibility so that developers don’t feel like they have to just dump existing projects and start from scratch. While the company is launching with an open source tool, it plans to use the funding to build a hosted version of Redpanda to put it within reach of more organizations. “This funding round in particular is to power our cloud,” he said.
Arif Janmohamed, a partner at Lightspeed Ventures who is leading the investment in Vectorized sees a company looking to improve upon an existing technology with a better approach. “With a simple, elegant solution that doesn’t require any changes to an existing application’s code, Vectorized delivers 10x better performance, a much simpler management paradigm, and new functionality that will unleash the next set of real-time applications for the next decade,” Janmohamed said.
The company has 22 employees today with plans to add another 8 in the first half of this year, mostly engineers to help build the hosted version. As a Latino founder, Gallego is acutely aware of the need for a diverse and inclusive workforce. “What I have found is that being a [Latino] CEO, it attracts more people that look like me, and so that’s been a big thing, and it’s made a difference [in attracting diverse candidates],” he said.
One concrete thing he has done is start a scholarship to encourage under represented groups to become developers. “I started a scholarship where we just give money and mentorship to communities of Latino, Black and female developers, or people that want to transition to software engineering,” he said. While he says he does it without strings attached, he does hope that some of these folks could become part of the tech industry eventually, and perhaps even work at his company.
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Calm raises $75M more at $2B valuation
Calm, a well-known meditation app, has raised new capital at a valuation of $2 billion. The round was anticipated after the company was reported to be hunting for up to $150 million at a valuation of $2.2 billion; perhaps Calm will follow in the steps of Robinhood and add a second tranche to the round in time.
Prior investor Lightspeed Venture Partners led the investment, which also saw participation from Insight, TPG and Salesforce CEO and new Slack owner Marc Benioff, among others.
That Calm was able to secure more capital is not surprising. The company has a history of quick revenue growth, and is reportedly profitable, to boot. And the investment comes after mental health-focused startups as a category have performed well from a venture capital perspective.
The coronavirus pandemic has likely also played into Calm’s attractiveness as an investment. Since the beginning, researchers have warned about the psychological toll that a pandemic could have on humanity. A recent Pew Research study suggested that people who have lost their jobs during the pandemic might be feeling higher levels of distress during this time. Rival service Headspace offered an annual subscription to its platform for free for those that are unemployed.
Calm responded to the toll of coronavirus by launching a page of free resources, and focusing on a partnership with nonprofit health system Kaiser Permanente. Kaiser was the first health system to make Calm app’s Premium subscription free for its members.
The startups sells a consumer service for around $70 per year, or $15 per month. And the startup has built out a corporate arm, “Calm for Business,” that likely brings revenue stability that augments its consumer efforts.
As part of a release concerning today’s news, Calm detailed a number of nearly useful growth metrics. The service has over 100 million downloads, up from 40 million downloads in February 2019. It also grew up from 1 million paying users to 4 million paying users in the same time period (we asked if that data was inclusive of any Calm for Business customers, a question Calm did not answer).
Other TechCrunch queries regarding the company’s economics, revenue growth and performance compared to its pre-COVID plan also went unanswered.
Calm and rival service Headspace have now raised a combined $434 million according to Crunchbase data, underscoring how attractive their models have proved to venture capitalists. According to a Bloomberg interview, Calm is considering acquiring smaller companies in the wake of its new capital event.
Regardless, Calm now has a refreshed war chest heading into 2021 and a plan to go hunting. That should generate a headline or two.
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Materialize scores $40 million investment for SQL streaming database
Materialize, the SQL streaming database startup built on top of the open-source Timely Dataflow project, announced a $32 million Series B investment led by Kleiner Perkins, with participation from Lightspeed Ventures.
While it was at it, the company also announced a previously unannounced $8 million Series A from last year, led by Lightspeed, bringing the total raised to $40 million.
These firms see a solid founding team that includes CEO Arjun Narayan, formerly of Cockroach Labs, and chief scientist Frank McSherry, who created the Timely Dataflow project on which the company is based.
Narayan says that the company believes fundamentally that every company needs to be a real-time company, and it will take a streaming database to make that happen. Further, he says the company is built using SQL because of its ubiquity, and the founders wanted to make sure that customers could access and make use of that data quickly without learning a new query language.
“Our goal is really to help any business to understand streaming data and build intelligent applications without using or needing any specialized skills. Fundamentally what that means is that you’re going to have to go to businesses using the technologies and tools that they understand, which is standard SQL,” Narayan explained.
Bucky Moore, the partner at Kleiner Perkins leading the B round, sees this standard querying ability as a key part of the technology. “As more businesses integrate streaming data into their decision-making pipelines, the inability to ask questions of this data with ease is becoming a non-starter. Materialize’s unique ability to provide SQL over streaming data solves this problem, laying the foundation for them to build the industry’s next great data platform,” he said.
They would naturally get compared to Confluent, a streaming database built on top of the Apache Kafka open-source streaming database project, but Narayan says his company uses straight SQL for querying, while Confluent uses its own flavor.
The company still is working out the commercial side of the house and currently provides a typical service offering for paying customers with support and a service agreement (SLA). The startup is working on a SaaS version of the product, which it expects to release some time next year.
They currently have 20 employees with plans to double that number by the end of next year as they continue to build out the product. As they grow, Narayan says the company is definitely thinking about how to build a diverse organization.
He says he’s found that hiring in general has been challenging during the pandemic, and he hopes that changes in 2021, but he says that he and his co-founders are looking at the top of the hiring funnel because otherwise, as he points out, it’s easy to get complacent and rely on the same network of people you have been working with before, which tends to be less diverse.
“The KPIs and the metrics we really want to use to ensure that we really are putting in the extra effort to ensure a diverse sourcing in your hiring pipeline and then following that through all the way through the funnel. That’s I think the most important way to ensure that you have a diverse [employee base], and I think this is true for every company,” he said.
While he is working remotely now, he sees having multiple offices with a headquarters in NYC when the pandemic finally ends. Some employees will continue to work remotely, with the majority coming into one of the offices.
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Cato Network snags $130M Series E on $1B valuation as cloud wide area networking thrives
Cato Networks has spent the last five years building a cloud-based wide area network that lets individuals connect to network resources regardless of where they are. When the pandemic hit, and many businesses shifted to work from home, it was the perfect moment for technology like this. Today, the company was rewarded with a $130 million Series E investment on $1 billion valuation.
Lightspeed Venture Partners led the round, with participation from new investor Coatue and existing investors Greylock, Aspect Ventures/Acrew Capital, Singtel Innov8 and Shlomo Kramer (who is the co-founder and CEO of the company). The company reports it has now raised $332 million since inception.
Kramer is a serial entrepreneur. He co-founded Check Point Software, which went public in 1996, and Imperva, which went public in 2011 and was later acquired by private equity firm Thoma Bravo in 2018. He helped launch Cato in 2015. “In 2015, we identified that the wide area networks (WANs), which is a tens of billions of dollars market, was still built on the same technology stack […] that connects physical locations, and appliances that protect physical locations and was primarily sold by the telcos and MSPs for many years,” Kramer explained.
The idea with Cato was to take that technology and redesign it for a mobile and cloud world, not one that was built for the previous generation of software that lived in private data centers and was mostly accessed from an office. Today they have a cloud-based network of 60 Points of Presence (PoPs) around the world, giving customers access to networking resources and network security no matter where they happen to be.
The bet they made was a good one because the world has changed, and that became even more pronounced this year when COVID hit and forced many people to work from home. Now suddenly having the ability to sign in from anywhere became more important than ever, and they have been doing well, with 2x growth in ARR this year (although he wouldn’t share specific revenue numbers).
As a company getting Series E funding, Kramer doesn’t shy away from the idea of eventually going public, especially since he’s done it twice before, but neither is he ready to commit any time table. For now, he says the company is growing rapidly, with almost 700 customers — and that’s why it decided to take such a large capital influx right now.
Cato currently has 270 employees, with plans to grow to 400 by the end of next year. He says that Cato is a global company with headquarters in Israel, where diversity involves religion, but he is trying to build a diverse and inclusive culture regardless of the location.
“My feeling is that inclusion needs to happen in the earlier stages of the funnel. I’m personally involved in these efforts, at the educational sector level, and when students are ready to be recruited by startups, we are already competitive, and if you look at our employee base it’s very diverse,” Kramer said.
With the new funds, he plans to keep building the company and the product. “There’s a huge opportunity and we want to move as fast as possible. We are also going to make very big investments on the engineering side to take the solution and go to the next level,” he said.
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Discuss the unbundling of early-stage VC with Unusual Ventures’ Sarah Leary & John Vrionis
This year has been everything but business as usual for the venture and tech community. And we still have a presidential election ahead of us.
So, why not listen to the aptly-named experts over at Unusual Ventures? Partners Sarah Leary (co-founder of Nextdoor) and John Vrionis, formerly of Lightspeed Ventures Partners, will join us on Tuesday, October 20 on the Extra Crunch Live virtual stage.
Thanks to all of you who have joined us for our series of live discussions that has included tech leaders like Sydney Sykes, Alexia von Tobel, Mark Cuban and many others (all recordings are still accessible for Extra Crunch subscribers to watch and learn from).
If you’re new, welcome! You’ll have a chance to participate in the live discussion if you have an Extra Crunch subscription.
Unusual Ventures’ investments span the consumer and enterprise space, including companies like Robinhood, AppDynamics, Mulesoft and Winnie.
For this chat, I plan to spend some time talking to Leary and Vrionis about how early-stage venture capital has changed with the rise of rolling funds, community funds and syndicates. Unusual Ventures claims “there’s an enormous opportunity to raise the bar on what seed-stage investors provide for early-stage founders,” so we’ll get into that opportunity as well.
And if we have time, we’ll discuss remote work, building in public and the U.S. presidential election.
So, what are you waiting for? Add the deets to your calendar (below the jump!) and join me next Tuesday.
Details
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Rephrase.ai raises $1.5M to use synthetic media for personalized sales pitches
Bangalore-based Rephrase.ai has an ambitious vision for reshaping how movies and videos are made.
CEO Ashray Malhotra laid it out for me yesterday, saying that his co-founder Nisheeth Lahoti “came up with this concept — he wants to build an engine that can take any script as input and create a professional movie,” no filming required.
But Rephrase.ai is starting with what Malhotra said is a more “short-term, monetizable” goal: Offering technology that makes it easy to create personalized sales videos.
The startup was part of the Techstars Bangalore program in 2019 and is announcing today that it has raised $1.5 million in seed funding led by Lightspeed Venture Partners and AV8 Ventures.
Malhotra demonstrated the technology for me, showing me how a salesperson can select a model, a background and a voice, and enter text that the model will recite. They can then export that video for use in a variety of sales tools.
This is valuable for, he said, because sending personalized video messages in sales emails can lead to “an insane increase” in clickthrough rates. But creating all those videos can be a huge chore, if not downright impossible.
And while there are plenty of other startups working on synthetic media, Malhotra said Rephrase.ai is set apart by the 18 months the team spent developing technology that can take 10 minutes of footage and “predict how the lip movements of the person would have been if you’d shot them [saying any phrase] in an actual studio.”
You can see the results for yourself in the video above. Personally, I was impressed by the lip movements but disconcerted by the fact that Rephrase.ai customers can pair any model with any voice, leading to some strange combinations that feel more like badly dubbed movie than an effective sales pitch.
When I brought this up, Malhotra replied that some clients will want to take the time “perfecting it out, finding the right voices, the right costumes, the right personality of the actors,” while other clients might be fine spending less time to create something a little less convincing.
It’s also worth noting that Rephrase.ai has several policies designed to prevent the creation of deceptive deepfakes: Presenters can control who has the authority to create videos using their faces, the platform is only open to authorized businesses and videos are created from scratch, rather than transferring someone’s face onto an existing person.
Malhotra said Rephrase.ai is currently talking to a number of potential customers, but those discussions are in early stages. He also suggested that the technology could expand fairly quickly into areas like chatbots and education.
“I think it’s going to open a whole new world of creativity,” he said. “When you and I want to express something, we’re most likely to write a text document, but as a viewer, we want to see a video. They’ve been disconnected because video creation is really difficult.”
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Edtech investors are panning for gold
The spotlight on edtech grows brighter and harsher: On one end, remote-learning startups are attracting millions in venture capital. On the other, many educators and parents are unimpressed with the technology that enables virtual learning and gaps remain in and out of the classroom.
It’s clear that edtech’s nebulous pain points — screen time, childcare and classroom management — require innovation. But as founders flurry to a sector recently rejuvenated with capital, the influx of interest has not fostered any breakout solutions. As a result, edtech investors must hone their skills at sorting the innovators from the opportunists amid the rush.
Lucky for us, investors shared notes during TechCrunch Disrupt and offline regarding how they are separating the gold from the dust, giving us a peek into their due diligence process (and inboxes).
Putting profitability over growth
The pandemic has broadly forced founders to get more conservative and prioritize profitability over the usual “growth at all costs” startup mentality. Growth still matters, but within edtech, the boom comes with a big focus on profitability, efficacy, outcomes and societal impact.
“The goal of all of education is personalized learning, when every student receives exactly the instruction in the way that they need it at the time that they need it. And that’s really, really difficult to do if you’re trying to have one person teach 180 students,” said Mercedes Bent of Lightspeed Venture Partners. “And so I’ve been excited to see more solutions that are focused on creating smaller class sizes that are also focused on allowing students to connect with people outside of their homes as well.”
During Disrupt, Reach Capital’s Jennifer Carolan brought up a recent Netflix documentary, “The Social Dilemma,” which illustrates the impact screen time can have on society. When vetting companies, Carolan said she wanted to see founders who have considered how their products may impact young users.
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