Infinite Income Multiples – TechCrunch
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Today is Christmas Day, so I’m not sure how many of you are actually here. Hello to the seven of us avoiding our families I guess.
But before we get called back to talk to other people, let’s talk about two quick things, right? Let’s have fun one last time in 2021. Thanks for reading, by the way. I like you.
By far the best story of the week wasn’t Jack calling direct bullshit on Web3, but a roundtable. The tour itself wasn’t that fascinating, but the story behind Airbyte’s tour was.
Airbyte, for reference, is an open source startup that helps customers move data. It’s a big market, frankly, because there’s a lot of data out there, and it just doesn’t stay put. Businesses want to move it here and there. And doing it is hard work. I’m not going to yell at you about Extract, Load, and Process (ELT) at this point as it doesn’t have to be, but this is the general market Airbyte competes in.
In business terms, the company offers a free open source product, natch, and a paid service. The paid version of Airbyte includes the usual business-friendly tools you’d expect; things like SSO, for example. And accommodation. So a pretty standard OSS game so far, right?
Back to the money. Airbyte raised a fundraising round in early 2021 via Crunchbase data. Then the company lifted a Series A in May. By this point, the company had taken in over $ 30 million this year, which was a lot of money.
The sum was also ridiculous compared to what followed. Airbyte has closed a $ 150 million Series B this week at a valuation of around $ 1.5 billion. And even better, the business has revenue today less than $ 1 million (recurring annual income, or ARR).
I joked on twitter that the company flexes a revenue multiple of 1,500x. People found it funny.
Turns out that was only half the joke. After the Airbyte news fell, I heard that revenue was probably a little more under the million dollar mark than I initially thought. This means that Airbyte actually has a multiple ARR of much more than 1,500x.
Indeed it is infinite. It is incredible and that’s where venture capital was always going in 2021. What do I mean by that? Good:
- In recent times, larger funds have invested earlier and earlier in the lifecycle of startups to both deploy more capital and ensure they can get an allocation in later cycles of trending companies. .
- This means that more startups than ever have been able to raise huge rounds based more on FOMO than revenue than before.
- Then 2021 arrived and there was even more money was floating around, apparently, and the above two points got worse.
- I’ve heard that Series B rounds are done with a six-digit ARR, whereas at the time (2019) it was a rule of thumb that to raise a Series A, $ 1 million in ARR was the minimum.
- And now with Airbyte it seems there is no effective limit on the value of a business relative to its revenue base.
How did Airbyte achieve the feat? I have a hunch. An open source business has a simply awesome set of non-revenue metrics that it can present to investors when it grows. For example, usage and contribution information for its open source project. So my guess Here, Airbyte has a high level of community use, even though its paid products are more than nascent.
Is the Airbyte stupid? Who knows! All we can say is that there was enough data somewhere so that investors feel comfortable putting nine-digit capital in the business at a ten-digit valuation, despite significantly lower income numbers.
It’s bullish for open source startups, right? I think so.
And finally, Juna
I met the founder and CEO of Juna Pierre Ariane the other day to discuss what his startup is doing. The gist of the startup is that they are working with insurers to provide low-cost sexual wellness testing for sexually active people. It’s about applying a hybrid model of DTP and health tech to young people, in the hopes of shifting the convention around testing to something you do proactively, rather than reactively.
Not to drag COVID into everything, but I wonder if we’re all a little more used to being tested now these days. I’m leaving in a few minutes to have my nose pricked with a swab, if that’s still the way COVID testing is going. The delights of modern life.
Juna is awesome, not only because I think his product is cool and would have used when I was younger and unmarried, but also because of his marketing strategy. You hear a lot about brands leveraging social media for attention, don’t you? Well, Juna makes TikTok work for his business.
According to Arian, the company’s waitlist for access is growing between 15% and 20% per month, which looks pretty healthy. Juna is aiming for a February launch, so he still has time to add more names. Maybe his use of TikTok will continue to pay off?
The company is in the process of raising capital but is not quite done yet. So I’ll come back to chat with Arian when he closes the tour and opens the waiting list. Testing isn’t sexy, but sexing people is? Something like that.