Why Invest Now? Three Investors Share the Story Behind Alation’s Series E

By Talo Thomson

Published on November 2, 2022

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Alation has raised $123M in Series E funding at a valuation of in excess of $1.7B, a material increase from the Series D round in June of last year, particularly in the context of the recent stock-market decline. This financing follows five quarters of consecutive accelerated growth and comes on the heels of last month’s announcement that Alation had surpassed $100M in ARR (annual recurring revenue).

This round was led by Thoma Bravo, Sanabil Investments, and Costanoa Ventures, with participation from new strategic partner Databricks Ventures.

Bar graph of the VC Investments by Quarter: Early vs. Late Stage from Irving Investors

The timing may surprise some. VC investments are at an all-time low. So why invest now, and in this turbulent market? To get the story, I interviewed three investors: Robert (Tre) Sayle from Thoma Bravo, Greg Sands from Costanoa, and Andrew Ferguson from Databricks Ventures. (These interviews have been edited for length and clarity.)

Tre Sayle of Thoma Bravo

New investor Thoma Bravo led the round. This leading software investment firm has partnered with the who’s-who of data-centric companies, including Qlik and Starburst, to help them drive sustainable, long-term growth. Partner Tre Sayle pointed to Alation’s leadership, stellar product reputation, and momentum as core reasons for investing.

“It all starts with great management,” Sayle shares. “We’ve been thrilled with what we’ve seen and were able to cultivate as we’ve built a relationship over a multi-month period with the executive team at Alation. We’re very, very excited about that. And I think this is really a bet on management and their vision for the company.”

That enthusiasm extends to the product as well. “Alation has a fantastic reputation franchising and selling to the analyst or the business user, as well as IT groups, as opposed to IT groups alone like other players we looked at,” recounts Sayle. It also helped that other analytics companies in Thoma Bravo’s portfolio echoed that positive feedback. “They had confirmed that Alation was recognized as the leader in the market and in servicing that community, so we were very impressed,” he shares.

Thoma Bravo was also impressed by the warm feedback Alation users gave to the customer success organization. “How you treat customers is one of the top two or three things that distinguish why someone goes with a vendor,” Sayle points out. And nothing kills an investor’s enthusiasm like poor customer support. “It’s disappointing to read about a company in which we’re interested and seeing halfhearted feedback on customer service,” he says. “Many people will say, ‘We’re using the product begrudgingly for now… but we haven’t loved how they’ve supported us on what we need.’”

“You feel great when you have it all, and that’s what we found with Alation,” he continues. “People told us, ‘We really like what the product is doing… but we also feel like the team cares and has a genuine concern for making us successful.’”

People told us, ‘We really like what the product is doing… but we also feel like the team cares and has a genuine concern for making us successful.’

Tre Sayle

Partner, Thoma Bravo

When asked why invest now, Sayle points to the company’s track record of accelerating growth. “Alation’s momentum stood out,” he says. “For five quarters in a row, Alation has seen increasing year-over-year ARR growth. And that’s even in the midst of 2022, which has been a tumultuous year from a macro perspective. The company continued to deliver very, very solid results. That was very unique. We had not seen that in the broader intelligence & data governance market.”

“Right now, it’s probably not a secret that the amount and the pace of financings – if you compare 2022 to 2021 – is night and day,” he continues. “It has slowed down tremendously. And that means that the bar for investment is incredibly high. If you’re going to invest and step into very tepid waters, you’ve got to be really thrilled about the prospects of the opportunity and the business, and Alation was that for us, and this is where we sit today.”

Greg Sands of Costanoa Ventures

Greg Sands is the founder and managing director at Costanoa Ventures, which was the first VC firm to invest in Alation nearly one decade ago. He also pointed to Alation’s momentum as a key reason for re-investing, even in this uncertain time.

“In the context of a turbulent, challenging market, the company is accelerating,” Sands exclaims. “And there just aren’t that many examples of companies accelerating during this time!”

“When financial markets freak out, they just tell you to slow down,” he continues. “And we looked at each other and said, this is not the time to slow down. We need to keep investing in product. We need to keep growing our footprint and customer base. This funding enables Alation to continue doing that at full speed.”

Indeed, Alation’s accelerating growth mirrors the faster pace of data and analytics today. Sands sees that market need as a major product opportunity. “Data is growing faster than ever, but it’s super fragmented,” he points out. “It can’t have the kind of structure and schema and rigidity that it used to have. And therefore, it has to be available to all the business users who need it. It has to be secure against the people who don’t need it. It has to be done in ways that meet standards for privacy, compliance, and governance. And in order to do that, it has to be tied together.”

“Alation has the chance to be that fabric and intelligence layer,” he states. “You’re going to need privacy, governance, profiling, lineage. All of those things have to be on a common platform. They should all leverage that common infrastructure. And that’s what we have the opportunity to deliver.”

Andrew Ferguson of Databricks Ventures

Andrew Ferguson, VP of Corporate Development & Ventures at Databricks, shared that Alation’s impressive growth, coupled with unique product opportunities, convinced them to join the round.

“One of the things we’ve been impressed with is how the company expanded from its roots ten years ago,” Ferguson shares. “It went from being really focused on data catalogs to becoming a much broader data intelligence platform – and one that’s cloud-native and therefore relevant for a much broader set of users within an enterprise, not just analysts or stewards, but all the way down to business users. We really like that ambition. And it aligns with our vision of also expanding the personas that are able to use the Databricks lakehouse within each enterprise.”

Driving adoption with Alation’s special brand of active governance will be a central goal of the new partnership. “At Databricks, we’re focused on enabling customers to adopt the data lakehouse, and that’s an open data architecture that combines the best of the data warehouse and the data lake into one platform,” Ferguson says. “ helps businesses really harness the power of data and analytics and AI. And data governance is critical to driving adoption.”

But why invest now? Ferguson is clear that even a cooling market didn’t diminish his team’s enthusiasm “Regardless of market conditions, we want to invest in innovative companies that are changing the way customers interact with the modern data stack and lakehouse ecosystem,” he states.

Expanding the Data Intelligence Platform

It’s been just a year and a half since Alation’s last funding round. In June of 2021, when Alation announced our Series D, CEO Satyen Sangani shared that this capital would enable the company to go faster.

Since then, Alation has accelerated growth. We’ve expanded our customer base to nearly 450 and our headcount to nearly 700, adding 200+ new customers and 300+ new employees in that time. The company was also crowned Snowflake’s Data Governance Partner of the Year (for a second time), launched the groundbreaking Data Quality Initiative, and achieved Centaur status with more than $100M in ARR. Just this summer, we’ve been recognized as a leader by Eckerson, IDC, BARC, Dresner, and Constellation.

And exciting things are on the horizon! With this funding, Alation plans to:

  • Invest in R&D and acquisitions to expand our multi-tenant SaaS offering.

  • Further expand our global workforce beyond the 700 Alationauts on the team today, spanning the US, EMEA, APAC, and LATAM regions.

  • Grow our customer success organization to deliver the best customer experience in the market, with new representatives, engineers, and deployment experts, so customers can leverage new innovations instantly.

  • Launch innovative new products and solutions to support our growing customer base of nearly 450 enterprises, including more than 25% of Fortune 100 companies.

What’s more, with the upcoming release of 2022.4, we’re thrilled to debut a big product announcement that will make trusted data even more user-friendly than ever before.

Now is a great time to check out Alation – either as a product for your business or as your next place for a career adventure. If you love working with passionate people and believe in a mission of empowering a curious and rational world, we’re hiring in every department.

  • Tre Sayle of Thoma Bravo
  • Greg Sands of Costanoa Ventures
  • Andrew Ferguson of Databricks Ventures
  • Expanding the Data Intelligence Platform
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