DataStax proves it's still possible to raise nine-figures at higher valuation in 2022
When DataStax hired Chet Kapoor as CEO in October 2019, one of the first moves he made was to bring in his old pal Sam Ramji to be chief strategy officer, someone he had worked with for many years and was deeply involved in open source throughout his career. The two had worked together successfully at Apigee, an API company that went public in 2015 before being acquired the following year by Google for $625 million.
Getting the band back together seems to have been a successful approach, as the company announced a $115 million investment on a $1.6 billion valuation today. That’s a 33% premium over a round completed just a year ago, according to the company. This is especially impressive in an economic environment where software valuations are taking a big hit and VC dollars are getting tighter.
Kapoor and Ramji took over a company almost a decade old that was best known for being the commercial company on top of the Apache Cassandra database. The two industry veterans decided it was time to modernize, and made a couple of acquisitions, including Kesque for streaming. Last year the company introduced Astra, a serverless database built on top of Cassandra and Astra Streaming, based on that Kesque acquisition, which the company introduced in beta last June.
Kapoor was working at Google in 2019, a place he was comfortable, but the allure of building a successful business was still there, and he saw in DataStax a company that had the potential to get there. He believes the tweaks he and Ramji, and other new executives he brought in, are making to the product line could help them reach $1 billion in revenue at some point down the road.
He also saw a company that checked a lot of key boxes for him. “I looked at a bunch of different companies and big data stacks. If you look at the triangle of number of developers and the skills, Cassandra is right on top…Outside of infrastructure service, the TAM for NoSQL is the fastest growing market out there, a massive market growing really fast. The people are the folks that built Cassandra, and then the last thing was durability -- culture and P&L,” Kapoor told me.
He says that to achieve a revenue goal like that involves some basic principles. “My mission is to serve real-time applications with an open data stack that just works.” He believes if his company can achieve that, it can attract customers building their highest growth apps. With that, he can achieve higher revenue, and it can help propel the company forward.
He’s been around long enough to understand that there is a lot of work ahead of him, but building companies on top of open source has proven a viable strategy for many startups. “I think there are many ways to build a really great company. We certainly believe that open source is critical because innovation doesn't happen in the cathedral. It happens in the bazaar. And so we spent a lot of time with the Apache Cassandra community, the Apache pulsar community…” he said.
While there are still companies using Cassandra in private data centers, the future is in the cloud and he sees offering a serverless database like Astra as another way to grow the business. It offers developers a way to build an application without worrying about database resources, and is part of making it just work for customers.
So far the approach has been working, as the company’s investors see a viable and growing company, giving them the confidence to give DataStax a fistfull of dollars at a time when many companies are struggling to get capital.
Today’s round was led by Goldman Sachs growth equity business with participation from RCM Private Markets, EDB Investments Pte. Ltd. along with existing investors Crosslink Capital, Meritech Capital Partners, OnePrime Capital and other unnamed investors.