M&A
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Fivetran hauls in $565M on $5.6B valuation, acquires competitor HVR for $700M
Fivetran, the data connectivity startup, had a big day today. For starters it announced a $565 million investment on a $5.6 billion valuation, but it didn’t stop there. It also announced its second acquisition this year, snagging HVR, a data integration competitor that had raised more than $50 million, for $700 million in cash and stock.
The company last raised a $100 million Series C on a $1.2 billion valuation, increasing the valuation by over 5x. As with that Series C, Andreessen Horowitz was back leading the round, with participation from other double dippers General Catalyst, CEAS Investments, Matrix Partners and other unnamed firms or individuals. New investors ICONIQ Capital, D1 Capital Partners and YC Continuity also came along for the ride. The company reports it has now raised $730 million.
The HVR acquisition represents a hefty investment for the startup, grabbing a company for a price that is almost equal to all the money it has raised to date, but it provides a way to expand its market quickly by buying a competitor. Earlier this year Fivetran acquired Teleport Data as it continues to add functionality and customers via acquisition.
“The acquisition — a cash and stock deal valued at $700 million — strengthens Fivetran’s market position as one of the data integration leaders for all industries and all customer types,” the company said in a statement.
While that may smack of corporate marketing-speak, there is some truth to it, as pulling data from multiple sources, sometimes in siloed legacy systems, is a huge challenge for companies, and both Fivetran and HVR have developed tools to provide the pipes to connect various data sources and put it to work across a business.
Data is central to a number of modern enterprise practices, including customer experience management, which takes advantage of customer data to deliver customized experiences based on what you know about them, and data is the main fuel for machine learning models, which use it to understand and learn how a process works. Fivetran and HVR provide the nuts and bolts infrastructure to move the data around to where it’s needed, connecting to various applications like Salesforce, Box or Airtable, databases like Postgres SQL or data repositories like Snowflake or Databricks.
Whether bigger is better remains to be seen, but Fivetran is betting that it will be in this case as it makes its way along the startup journey. The transaction has been approved by both companies’ boards. The deal is still subject to standard regulatory approval, but Fivetran is expecting it to close in October.
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Glassdoor acquires Fishbowl, a semi-anonymous social network and job board, to square up to LinkedIn
While LinkedIn doubles down on creators to bring a more human, less manicured element to its networking platform for professionals, a company that has built a reputation for publishing primarily the more messy and human impressions of work life has made an acquisition that might help it compete better with LinkedIn.
Glassdoor, the platform that lets people post anonymous and candid feedback about the organizations they work for, has acquired Fishbowl — an app that gives users an anonymous option also to provide frank employee feedback, as well as join interest-based conversation groups to chat about work, and search for jobs. Glassdoor, which has 55 million monthly users, is already integrating Fishbowl content into its main platform, although Fishbowl, with its 1 million users, will also continue for now to operate as a standalone app, too.
Christian Sutherland-Wong, the CEO of Glassdoor, said that he sees Fishbowl as the logical evolution of how Glassdoor is already being used. Similarly, since people are already seeking out feedback on prospective employers, it makes sense to bring recruitment and reviews closer together.
“We’ve always been about workplace transparency,” he said in an interview. “We expect in the future that jobseekers will use Glassdoor reviews, and also look to existing professionals in their fields to get answers from each other.” Fishbowl has seen a lot of traction during the Covid-19 pandemic, growing its user base threefold in the last year.
The acquisition is technically being made by Recruit Holdings, the Japanese employment listings and tech giant that acquired Glassdoor for $1.2 billion in 2018, and the companies are not disclosing any financial terms. San Francisco-based Fishbowl — founded in 2016 by Matt Sunbulli and Loren Appin — had raised less than $8 million, according to PitchBook data, from a pretty impressive set of investors, including Binary Capital, GGV, Lerer Hippeau Ventures, and Scott Belsky.
Microsoft-owned LinkedIn towers over the likes of Glassdoor in terms of size. It now has more than 774 million users, making it by far the biggest social media platform targeting professionals and their work-related content. But for many, even some of those who use it, the platform leaves something to be desired.
LinkedIn is a reliable go-to for putting out a profile of yourself, for the public, for those in your professional life, or for recruiters, to find. But what LinkedIn largely lacks are normal people talking about work in an honest way. To read about other’s often self-congratulatory professional developments, or to see motivational words on professional development from already hugely successful personalities, or to browse developments relative to your industry that probably have already seen elsewhere is not everyone’s cup of tea. It’s anodyne. Sometimes people just want tea to be spilled.
That’s where something like Glassdoor comes into the picture: the format of making comments anonymous on there turns it into something of the anti-LinkedIn. It is caustic, perhaps sometimes bitter, talk about the workplace, balanced out with positive words seem to get periodically suspected of being seeded by the companies themselves. Motivational, inspirational and aspirational are generally not part of the Glassdoor lexicon; honest, illuminating, and sobering perhaps are.
Fishbowl will be used to augment this and give Glassdoor another set of tools now to see how it might build out its platform beyond workplace reviews. The idea is to target people who come to Glassdoor to read about what people think of a company, or to put in their own comments: they can now also jump into conversations with others; and if they are coming to complain about their employer, now they can also look for a new one!
In the meantime, it feels like the swing to more authenticity is also a result of the shift we’ve seen in the world of work.
Covid-19 mandated office closures and social distancing have meant that many professionals have been working at home for the majority of the last year and a half (and many continue to do so). That has changed how we “come to work”, with many of our traditional divides between work and non-work personas and time management blurring. That has had an inevitable impact on how we see ourselves at work, and what we seek to get out of that engagement. And it also has led many people to feel isolated and in need of more ways to connect with colleagues.
Glassdoor’s acquisition, it said, was in part to meet this demand. A Harris Poll commissioned by Glassdoor found that 48% of employees felt isolated from coworkers during the COVID-19 pandemic; 42% of employees felt their career stall due to the lack of in-person connection; and 45% of employees expect to work hybrid or full-time remotely going forward — all areas that Glassdoor believes can be addressed with better tools (like Fishbowl) for people to communicate.
Of course, it will remain to be seen whether Glassdoor can convert its visitors to use the new Fishbowl-powered tools, but if there really is a population of users out there looking for a new kind of LinkedIn — there certainly are enough who love to complain about it — then maybe this cold be one version of that.
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Logistics startup Stord raises $90M in Kleiner Perkins-led round, becomes a unicorn and acquires a company
When Kleiner Perkins led Stord’s $12.4 million Series A in 2019, its founders were in their early 20s and so passionate about their startup that they each dropped out of their respective schools to focus on growing the business.
Fast-forward two years and Stord — an Atlanta-based company that has developed a cloud supply chain — is raising more capital in a round again led by Kleiner Perkins.
This time, Stord has raised $90 million in a Series D round of funding at a post-money valuation of $1.125 billion — more than double the $510 million that the company was valued at when raising $65 million in a Series C financing just six months ago.
In fact, today’s funding marks Stord’s third since early December of 2020, when it raised its Series B led by Peter Thiel’s Founders Fund, and brings the company’s total raised since its 2015 inception to $205 million.
Besides Kleiner Perkins, Lux Capital, D1 Capital, Palm Tree Crew, BOND, Dynamo Ventures, Founders Fund, Lineage Logistics and Susa Ventures also participated in the Series D financing. In addition, Michael Rubin, Fanatics founder and founder of GSI Commerce; Carlos Cashman, CEO of Thrasio; Max Mullen, co-founder of Instacart; and Will Gaybrick, CPO at Stripe, put money in the round. Previous backers include BoxGroup, Susa Ventures, Dynamo, Revolution and Rise of the Rest Seed Fund, among others.
Founders Sean Henry, 24, and Jacob Boudreau, 23, met while Henry was at Georgia Tech and Boudreau was in online classes at Arizona State (ASU) but running his own business, a software development firm, in Atlanta.
Over time, Stord has evolved into a cloud supply chain that can give companies a way to compete and grow with logistics, and provides an integrated platform “that’s available exactly when and where they need it,” Henry said. Stord combines physical logistics services such as freight, warehousing and fulfillment in that platform, which aims to provide “complete visibility, rapid optimization and elastic scale” for its users.
About two months ago, Stord announced the opening of its first fulfillment center, a 386,000-square-foot facility, in Atlanta, which features warehouse robotics and automation technologies. “It was the first time we were in a building ourselves running it end to end,” Henry said.
And today, the company is announcing it has acquired Connecticut-based Fulfillment Works, a 22-year-old company with direct-to-consumer (DTC) experience and warehouses in Nevada and in its home state.
With FulfillmentWorks, the company says it has increased its first-party warehouses, coupled with its network of over 400 warehouse partners and 15,000 carriers.
While Stord would not disclose the amount it paid for Fulfillment Works, Henry did share some of Stord’s impressive financial metrics. The company, he said, in 2020 delivered its third consecutive year of 300+% growth, and is on track to do so again in 2021. Stord also achieved more than $100 million in revenue in the first two quarters of 2021, according to Henry, and grew its headcount from 160 people last year to over 450 so far in 2021 (including about 150 Fulfillment Works employees). And since the fourth quarter is often when people do the most online shopping, Henry expects the three-month period to be Stord’s heaviest revenue quarter.
For some context, Stord’s new sales were up “7x” in the second quarter of 2020 compared to the same period last year. So far in the third quarter, sales are up almost 10x, according to Henry.
Put simply, Stord aims to give brands a way to compete with the likes of Amazon, which has set expectations of fast fulfillment and delivery. The company guarantees two-day shipping to anywhere in the country.
“The supply chain is the new competitive battleground,” Henry said. “Today’s buying expectations set by Amazon and the rise of the omni-channel shopper have placed immense pressure on companies to maintain more nimble and efficient supply chains… We want every company to have world-class, Prime-like supply chains.”
What makes Stord unique, according to Henry, is the fact that it has built what it believes to be the only end-to-end logistics network that combines the physical infrastructure with software.
That too is one of the reasons that Kleiner Perkins doubled down on its investment in the company.
Ilya Fushman, Stord board director and partner at Kleiner Perkins, said even at the time of his firm’s investment in 2019, that Henry displayed “amazing maturity and vision.”
At a high level, the firm was also just drawn to what he described as the “incredibly large market opportunity.”
“It’s trillions of dollars of products moving around with consumer expectation that these products will get to them the same day or next day, wherever they are,” Fushman told TechCrunch. “And while companies like Amazon have built amazing infrastructure to do that themselves, the rest of the world hasn’t really caught up… So there’s just amazing opportunity to build software and services to modernize this multitrillion-dollar market.”
In other words, Fushman explained, Stord is serving as a “plug and play” or “one stop shop” for retailers and merchants so they don’t have to spend resources on their own warehouses or building their own logistics platforms.
Stord launched the software part of its business in January 2020, and it grew 900% during the year, and is today one of the fastest-growing parts of its business.
“We built software to run our logistics and network of hundreds of warehouses,” Henry told TechCrunch. “But if companies want to use the same system for existing logistics, they can buy our software to get that kind of visibility.”
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Intuit’s $12B Mailchimp acquisition is about expanding its small business focus
At first blush, the $12 billion Intuit-Mailchimp deal might not make a heck of a lot of sense. But people tend to pigeonhole companies, and in this case they might see Intuit as purely a financial software company and Mailchimp as an email marketing firm and nothing more. If that’s as far as your perspective goes, the deal is confusing. From a wider lens, however, there’s more to both companies than you might think.
Let’s start with Intuit. If you go to the company website and scan the product set, it’s clearly all about managing finances for consumer and small businesses alike. The latter category appears to be what the company wants to exploit and expand upon with this deal.
Prior to yesterday’s news, Intuit’s biggest acquisition had been on the consumer side buying Credit Karma for $7.1 billion last year. That deal gave the company’s customers a way to access their credit scores outside of the big three reporting companies: Experian, Equifax and TransUnion. Apparently not content with only that transaction, it set its sights on Mailchimp to throw some money at the business side of the house.
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PayPal acquires Japan’s Paidy for $2.7B to crack the buy now, pay later market in Asia
PayPal Holdings, the U.S. fintech company, announced an acquisition of Paidy, a Japanese buy now, pay later (BNPL) service platform, for approximately $2.7 billion (300 billion yen), mostly in cash, to enhance its business in Japan.
The transaction completion, including the regulatory approval, is expected in the fourth quarter of 2021.
After the acquisition, the Japan-based company will continue to operate its existing business and maintain the brand while the leaders, Paidy’s president and CEO Riku Sugie and founder and executive chairman Russell Cummer, keep their positions.
Japan is the third largest e-commerce market in the world, and so this is a significant move by PayPal to gain more market share both in the country and the region, specifically in the area of providing deferred payment services as an alternative to credit cards.
PayPal has long played nice with payment cards — users can upload details of their cards to PayPal and use it as a kind of digital wallet to manage how they pay for things online through it — but it got its start actually as a payment platform in itself, where people could pay into and out of PayPal accounts. Paidy is, in that sense, a strengthening of PayPal’s first-party rails, providing a way to “own” that flow of money on its own infrastructure, not involving the card networks.
Paidy is basically a two-sided payments service, acting as a middleman between consumers and merchants in Japan. Using machine learning it determines the creditworthiness of a consumer related to a particular purchase, and then it underwrites those transactions in seconds, guaranteeing payments to merchants. Consumers then make deferred payment to Paidy for those goods.
Paidy’s platform, which offers a monthly payment installment service branded “3-Pay”, enables shoppers to make purchases online and then pay for them each month in a consolidated bill at a convenience store or via bank transfer.
“Paidy pioneered buy now, pay later solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizable two-sided platform of consumers and merchants,” said Peter Kenevan, vice president, head of Japan at PayPal.
Paidy has more than 6 million registered users, and the plan is to integrate PayPal and other digital and QR wallets with Paidy Link to connect further online and offline merchants.
In April 2021, the Japan-based company launched Paidy Link, allowing users to link digital wallets with their Paidy account. PayPal was the first digital wallet partner to integrate with Paidy Link.
“PayPal was a founding partner for Paidy Link and we look forward to looking together to create even more value,” Sugie said in a statement.
“Japan has been a vibrant environment for our growth to date and we’re honored to have our team’s hard work and potential recognized by a global leader. Together with PayPal, we will be able to further achieve our mission of taking the hassle out of shopping,” Cummer said.
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H2O Hospitality secures $30M Series C to expedite hotel digital transformation
The pandemic has triggered more demand for contactless and staff-less operations in the hospitality sector, and now H2O Hospitality, the unmanned hotel management company, has closed a $30 million round on the back of that boost. The South Korea and Japan-based startup automates front and backend processes including accommodation reservation, room management and front desk duties, and it will be using the funds to continue expanding its business.
The Series C round (equivalent to about 34 billion won) is being led by Kakao Investment and Korea Development Bank (KDB), Gorilla Private Equity, Intervest and NICE Investment also participated. With Southeast Asia’s joint fund, Kejora-Intervest Growth Fund also joined in the round, it is a sign that H2O Hospitality will be focusing specifically on the Southeast Asian Market. H2O Hospitality has raised $7 million Series B round from Samsung Ventures, Stonebridge Ventures, IMM Investment and Shinhan Capital in February 2020.
H2O Hospitality will expand its business further by adding various types of accommodations in South Korea and Japan in 2021 and 2022 and plans to enter Singapore and Indonesia in 4Q in 2022 in line with its Southeast Asia penetration strategy, according to H2O Hospitality co-founder and CEO John Lee.
“H2O Hospitality is currently speaking with several global hotel chain companies to partner with their digital transformation and operation outside of Korea and Japan,” Lee told TechCrunch.
H2O will invest in R&D to advance its customer channel solutions and contactless check-in systems depending on customer needs of each country in Asia, Lee continued.
“We need optimal system development and customization for each accommodation and situation to lead successful hotel digital transformation even after COVID-19,” Lee said in an email interview.
H2O Hospitality was founded in South Korea 2015 by CEO John Lee, and it has been on something of an acquisition-expansion spree. It entered Japan in 2017, for example, by acquiring several Japanese hospitality management companies. In 2021, H2O acquired two South Korean companies such as the contactless hotel solution company, ImGATE, and a local creator startup, Replace, in order to enhance its technology and ESG competence.
These days, the company operates approximately 7,500 accommodations including hotels, ryokans and guest houses, in Tokyo, Osaka, Seoul, Busan, and Bangkok.
H2O Hospitality’s Information and Communications Technology (ICT)-based hotel management system, which enables hotel management to automate and digitize, includes the Channel Management System (CMS), Property Management System (PMS), Room Management System (RMS), and Facility Management System (FMS).
Its integrated hotel management system can reduce hotel management’s fixed operating costs by 50%, while increasing revenue by as much as 20%, according to its statement.
“COVID-19 hit the hospitality industry the most and most of the hotels wanted to decrease their fixed cost level, but it was impossible with their current operational flow,” Lee continued, “They had to go through digital transformation”.
When asked how the pandemic affected H2O as COVID-19 still freezes most of the tourism industry, Lee said H2O’s revenue has been increased by as much as 30% before the pandemic, but that percentage has been dropped to 5-15% post COVID-19. Revenue drivers these days are based around tools it’s built to improve the efficiency of its customers. They include its automated dynamic pricing (ADR) tool and diverse sales channels like online and offline travel agencies in domestic and overseas, he said.
Lee also pointed out that H2O has been onboarding a lot of properties and that has also contributed to H2O’s revenue growth in the last 18 months. H2O was the only company in Asia, he claims, and many property owners have started to get onboard since August 2020, he explained.
“Every single hotel that we onboarded during the pandemic turned around their profits & losses statements and started to recover their financial loss,” Lee said.
There are currently about 16.4 million hotel rooms in the world that generate $570 billion a year, according to Lee. H2O believes that it can digitize all the lodging accommodations in the world as the company’s main goal is not building a hotel brand but allowing hotel owners to operate their properties with better operation, he said.
Lee explained that the current hotel operation process looks a lot like that of “2G phones”, that was at a stage before turning to smartphones, and H2O is turning the overall hotel operation into a “smartphone”.
“This is a very natural transition for the (hospitality) industry as it was also natural for the cellphone users to transit from 2G phone to smartphone,” Lee said.
Unfortunately, the cross-border inbound tourism market has still been stopped for both Korea and Japan even though each domestic market is still pumping demand for the market, Lee mentioned.
“We believe the inbound tourism market will recover within a year as the vaccinations grow for both countries (Korea and Japan),” Lee said.
Managing Director at Kejora-Intervest Growth Fund Jun-seok Kang told TechCrunch: “We knew this new wave for hotel digital transformation trend was coming even before the pandemic; however, COVID-19 definitely expedited the transition period, and we believe H2O will thrive in the transforming hotel market.”
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Web building platform Duda snaps up e-commerce cart tool Snipcart
Duda announced Wednesday that it acquired Canada-based Snipcart, a startup that enables businesses to add a shopping cart to their websites.
The acquisition is Palo Alto-based Duda’s first deal, and follows the website development platform’s $50 million Series D round in June that brings its total funding to $100 million to date. Duda co-founder and CEO Itai Sadan declined to comment on the acquisition amount.
Duda, which works with digital agencies and SaaS companies, has approximately 1 million published paying sites, and the acquisition was driven by the company seeing a boost in e-commerce websites as a result of the global pandemic, he told TechCrunch.
This was not just about a technology acquisition for Duda, but also a talented team, Sadan said. The entire Snipcart team of 12 is staying on, including CEO Francois Lanthier Nadeau; the companies will be fully integrated by 2022 and the first collaborative versions will come out.
When he met the Snipcart team, Sadan thought they were “super experienced and held the same values.”
“We share many of the same types of customers, many of which are API-first,” he added. “If our customers need more headless commerce, they can build their own front end using Snipcart. Their customers will benefit from us growing the team — we plan to double it in the next year and roll out more features at a faster pace.”
The global retail e-commerce market is estimated to grow by 50% to $6.3 trillion by 2024, according to Statista. Duda itself has experienced a year over year increase of 265% in e-commerce sites being built on its platform, which Sadan said was what made Snipcart an attractive acquisition to further accelerate and manage its growth that includes over 17,000 customers.
Together, the companies will offer new capabilities, like payment and membership tools inside of the Duda platform. Many of Duda’s customers come with inventory and don’t want to manage it on another e-commerce platform, so Snipcart will be that component for taking their inventory and making it shoppable on the web.
“Everyone is thinking about how to introduce transactions into their websites and web experiences, and that is what we were looking for in an e-commerce platform,” Sadan said.
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Salad chain Sweetgreen buys kitchen robotics startup Spyce
Like so many other aspects of the robotics world, the pandemic has dramatically accelerated interest in the automated kitchen. After all, the food and restaurant industry was deemed essential amid global shutdowns, but finding kitchen staff proved a problem for many, especially early on when questions remained around COVID’s transmission.
This week, California-based fast casual salad chain Sweetgreen announced plans to go all in on automation with the acquisition of Spyce. Founded in 2015, the Boston-based startup started making waves a few years back as a spinout of MIT mechanical engineering students. First serving up food at the school’s dining hall, the team ultimately opened a pair of automated restaurants in the Boston area. The startup notes, “our Spyce restaurants will stay open at this time.”
Sweetgreen plans to eventually incorporate Spyce’s technology into its restaurants. It will likely take some time to scale up to the needs of the chain, which currently operates more than 120 locations across the U.S.
Image Credits: Spyce
“We built Sweetgreen to connect more people to real food and create healthy fast food at scale for the next generation, and Spyce has built state-of-the-art technology that perfectly aligns with that vision,” Sweetgreen CEO and co-founder Jonathan Neman said in a statement. “By joining forces with their best-in-class team, we will be able to elevate our team member experience, provide a more consistent customer experience and bring real food to more communities.”
Like pizza, salads are a clear target for early food automation. They’re both popular and relatively straightforward to automate — essentially mixing a bunch of ingredients from different chutes into a bowl.
Sweetgreen is quick to note that the plan isn’t to replace employees outright, however.
“[T]eam members will be able to focus more on preparation and hospitality moments, while having the opportunity to work with state-of-the-art technology,” the company writes. “Invest more in training and development to support team members to become Head Coaches. Interested team members will be able to develop technology-facing skills to operate and maintain Spyce technology.”
The deal is expected to close in Q3. Terms were not disclosed.
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Ramp and Brex draw diverging market plans with M&A strategies
Earlier today, spend management startup Ramp said it has raised a $300 million Series C that valued it at $3.9 billion. It also said it was acquiring Buyer, a “negotiation-as-a-service” platform that it believes will help customers save money on purchases and SaaS products.
The round and deal were announced just a week after competitor Brex shared news of its own acquisition — the $50 million purchase of Israeli fintech startup Weav. That deal was made after Brex’s founders invested in Weav, which offers a “universal API for commerce platforms.”
From a high level, all of the recent deal-making in corporate cards and spend management shows that it’s not enough to just help companies track what employees are expensing these days. As the market matures and feature sets begin to converge, the players are seeking to differentiate themselves from the competition.
But the point of interest here is these deals can tell us where both companies think they can provide and extract the most value from the market.
These differences come atop another layer of divergence between the two companies: While Brex has instituted a paid software tier of its service, Ramp has not.
Earning more by spending less
Let’s start with Ramp. Launched in 2019, the company is a relative newcomer in the spend management category. But by all accounts, it’s producing some impressive growth numbers. As our colleague Mary Ann Azevedo wrote:
Since the beginning of 2021, the company says it has seen its number of cardholders on its platform increase by 5x, with more than 2,000 businesses currently using Ramp as their “primary spend management solution.” The transaction volume on its corporate cards has tripled since April, when its last raise was announced. And, impressively, Ramp has seen its transaction volume increase year over year by 1,000%, according to CEO and co-founder Eric Glyman.
Ramp’s focus has always been on helping its customers save money: It touts a 1.5% cash back reward for all purchases made through its cards, and says its dashboard helps businesses identify duplicitous subscriptions and license redundancies. Ramp also alerts customers when they can save money on annual versus monthly subscriptions, which it says has led many customers to do away with established T&E platforms like Concur or Expensify.
All told, the company claims that the average customer saves 3.3% per year on expenses after switching to its platform — and all that is before it brings Buyer into the fold.
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Elastic acquires build.security for security policy definition and enforcement
Less than a year after raising its $6 million seed funding round, Tel Aviv and Sunnyvale-based startup build.security is being acquired by Elastic. Financial terms of the deal are not being publicly disclosed at this time. The deal is expected to close in Elastic’s Q2 FY22, ending October 31, 2021.
In an email to TechCrunch, Ash Kulkarni, chief product officer at Elastic, said that once the acquisition closes, the build.security technical team will continue as a unit in the Elastic Security organization. Kulkarni added that the acquisition will also become the foundation for a growing Elastic presence in Israel, with Amit Kanfer, co-founder and CEO of build.security, set to become the site lead for the region.
Build.security is focused on security policy management for applications. A core element of the company’s technology approach is the Open Policy Agent (OPA) open-source project, which is part of the Cloud Native Computing Foundation (CNCF), which is also home to Kubernetes. OPA was originally started by startup Styra, which itself has raised $40 million in funding to help build out policy management and authorization technology. Part of OPA is the Rego query language, which is used to structure security and authorization configuration policies.
“We see policy as a fundamental cornerstone of security,” Kulkarni said. “OPA and Rego provide an open, standards-based way to define, manage and enforce policies everywhere.”
Kulkarni noted that security policy technology is complementary to Elastic’s efforts in security and observability. He added that Elastic sees potential for using OPA and the technology that build.security has built on top of OPA to power deployment time, and in the future, build-time security for cloud-native environments.
YL Venture partner John Brennan, who helped to lead the seed round of build.security, sees the acquisition as being a good fit for both companies, as they are both creating solutions for developers that are based on open-source technologies.
“This move by a market leader like Elastic validates the need for transformation in the authorization space,” Brennan said. “This partnership will accelerate build.security’s shift-left vision of efficiently embedding access protection from the start, rather than trying to bolt it on after the fact or, worse, ignoring it completely.”
Elastic is known for its Elastic Stack, which provides Elasticsearch search capability, Logstash log monitoring and Kibana data visualization. In recent years the company has expanded into the security space, acquiring Endgame Security in 2019 for $234 million. On August 3, Elastic announced its Limitless XDR capabilities, which brings together endpoint security with security information and event management (SIEM).
With its new acquisition, Kulkarni said the goal is to go even deeper into security moving toward cloud security enforcement. He explained that after the acquisition closes and as the technology is integrated, users will be able to leverage the Elastic Stack to visualize and manage compliance policies and policy decisions at scale. An initial use-case for the build.security technology will be developing a Kubernetes security and compliance product based on OPA.
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