Fivetran Double Header: $565 Funding and an Acquisition

Fivetran, which ports data from multiple sources to cloud-based formats, launched a double-header of news today. It has bought HVR, a data replication software company, in a cash and stock deal valued at about $700 million, which is expected to close in October. Fivetran also has garnered $565 million in a Series D round, bringing its total raised to $730 million and boosting its valuation to $5.6 billion.

The funding compares with the $100 million Series C that Fivetran raised a little over a year ago on a valuation of $1.2 billion. The growth points to increased demand for reliable methods of extracting data from enterprise sources and transferring it to cloud environments for analysis.

Fivetran Buys HVR for Performance and Security

It’s not clear how the new funding relates to the acquisition of HVR, but the purchase should be a good one for Fivetran. Provided the integration goes as planned, HVR will contribute performance optimization to Fivetran’s platform, along with added security functions.

“Their product is the perfect complement to our automated data integration technology and will be instrumental for us to help enterprise organizations that want to improve their analytics with a modern data stack,” said George Fraser, CEO of Fivetran, in a press release.

The new technologies could strengthen Fivetran’s software-as-a-service (SaaS), which uses application programming interfaces (APIs) to create “pre-built connectors” to over 180 popular sources of enterprise data, including a range of enterprise resource planning (ERP) systems, Salesforce applications, and databases from IBM, Oracle, SAP, and others. The connectors comprise a secure pipeline from these data sources to cloud-based data warehouses, data lakes, or other data analysis tools (partnerships include Snowflake, RedShift, BigQuery, Azure Synapse Analytics, and Databricks SQL Analytics, among others).

Besides adding security and performance improvements, HVR could also help Fivetran expand its ecosystem of connectors and partners.

HVR was founded in 2012 in San Francisco. It lists 154 employees on LinkedIn. Customers include Telefonica, Siemens, 1-800 Flowers, and the U.S, Coast Guard, among others.

Another Step Up

It’s been a wild ride for Fivetran since its founding in 2013. Between March 2020 and March 2021, the company grew revenue by an order of magnitude. It has over 500 employees and 2,200 customers, including Autodesk, BJ's Restaurants, Conagra Brands, DocuSign, Forever 21, and Urban Outfitters, to name just a few.

Fivetran’s competition is growing as well. U.K.- and Denver-based rival Matillion recently announced a $150 million Series E round on a $1.5 billion valuation. The company offers connectors in a manner similar to Fivetran’s and also offers an option for customers to create their own connectors.

Other competitors include startups Hevo Data and Stitch, a company owned by Talend (Nasdaq: TLND). IBM (NYSE: IBM), Microsoft (Nasdaq: MSFT), Oracle (NYSE: ORCL), and SAP (NYSE: SAP) offer data extraction tools as well.

All of these companies offer a fresh take on the extract, transform, and load (ETL) functions designed to gather data from multiple sources into a single location for analysis. In today’s multi-cloud and hybrid cloud environments, differentiation is based on a range of elements such as breadth of ecosystem and security. So far, Fivetran has done well enough to pull ahead of other startups in the space, but as popularity brings competition from rivals like IBM and Oracle, challenges abound.

Fivetran’s latest round was led by Andreessen Horowitz (a16z) with participation from existing investors General Catalyst, CEAS Investments, Matrix Partners, and others, along with new investors ICONIQ Capital, D1 Capital Partners and YC Continuity.