The world of marketing has become a world of marketing tech. But marketers are not necessarily engineers, so working with the terabytes of data their campaigns produce can be a challenge. Today, a Stockholm startup called Funnel, which has built a no-code platform to help manage that process, is announcing $66 million in funding, a growth round that underscores the demand in the market for such tools. Funnel is describing this as a "pre-IPO" round: It will be its last before it files to go public, likely in its home market, and likely in the next six to 18 months.
Fourth Swedish National Pension Fund (AP4) and Stena Sessan are co-leading the round, with previous backers Balderton Capital, Eight Roads, F-Prime, Oxx and Industrifonden also participating, among others. Fredrik Skantze, the co-founder and CEO, said the company is not disclosing its valuation but he said it was considerably higher than its pre-money valuation in its last round, a pre-pandemic $47 million Series B in January 2020.
As a measure of Funnel's size, the company has about 1,200 large customers, with about half of them in the U.S. They include brands like Home Depot, trivago, Skechers, Samsung, Vodafone, Logitech, Skyscanner and SAS — Scandinavian Airlines, as well as Havas Media, a division of the French advertising and PR giant, Ogilvy and DAC Group.
The challenge that Funnel is tackling is that marketing has become a massively digitized business: Although outdoor, print, television and other analogue campaigns still account for 40% of marketing spend, that leaves 60% to digital.
That is a proportion that is still very much on the rise, not least because digital marketing provides a more measurable picture of how well a campaign is doing: People engage and respond on social media; they click on links; they share information to other platforms. The growing ubiquity of digital marketing also means that the data sources that a marketer typically uses are also growing.
"Four or five years ago, a marketer typically used seven data sources," said Skantze. "Then that grew to 10. Now, our customers might be using 20 to 30 or even 70 or 80 data sources. If you are active in 50 markets that becomes a complex problem."
But that also poses a data problem. When there are fewer platforms and marketing campaigns running, a marketer has typically relied on using spreadsheets to analyse data or tools specific to a single campaign. However, that becomes untenable as the data sources grow and as the expectations of what marketers want to get out of that information grow along with it. Working with the data that is produced thus usually requires the help of a data scientist to organise it to be reported in a more usable way.
"It’s not enough to simply use the raw data," Skantze said. "Facebook alone has 700 metrics, and the data you will get from a campaign just goes to a data warehouse. So you have to make it business-ready, you have to normalize it. That means using something like SQL. And that means marketers themselves cannot work directly with that funnel of data."
Funnel's platform is able to "read," organize and create reports for the various datasets coming out of these campaigns, by way of sets of rules that are pre-designed, or a company can customize for itself. It currently handles some 550 different data sources (from social media platforms to search engines and much more: Basically any digital platforms that might be used by a marketer to run a campaign). And it is adding more in as and when customers use them, Skantze said. Through drop-down menus, non-technical marketers can do, he said, "all the things they would have previously asked an IT person to do, to stage the data."
The key also is that it's focused on marketing, which also sets it apart from other competitors providing low-code tools to help organize data for further business intelligence or reporting applications.
"Five years ago I would have thought that BI tools would solve this, but the problem is that they are too horizontal and cover any type of data, whether it is marketing, geographical, financial or so on. So within marketing it might cover only five data sources, while we have 550," he said. "You can’t solve the problem of pulling in the data unless you are vertical in some sort of segment. It's the same with snowflake: It has 200 connectors but they are in too many areas."
Funnel's future growth may seem all but assured: More online activity breeds more marketing activity, and marketers are being expected to report and provide more, not less, insights about what they do and discover about their customers. On the other hand, the market is evolving. People do not want to be tracked; regulations are coming into force that are making it harder to gather marketing data; there is a growing body of technology that is looking for ways of creating "synthetic" datasets that could mean less reliance on pulling data out of marketing campaigns, which could mean less business for the Funnels of the world; and platforms are also changing their tune.
"The restrictions that Apple has placed on tracking on iOS has had a big impact especially for B2C companies," Skantze said. "They are not seeing the same level of performance as before. It's something our customers are concerned with but so far that hasn’t affected us. Our role is to pull down data, so that others can understand it. We are a bit like Switzerland here. We are a step away from the mechanics of adtech."
Regardless of how that develops, this is a good argument for diversifying to cover more than marketing in its platform.
There are a number of tools in the market today that are also creating ways to better order data troves so that they can be used for better business intelligence. They include Collibra and Acryl and many others. The key with Funnel is that it is presented firmly as a tool for non-technical people, and it has been built with marketing in mind, Skantze noted. That being said, the company has plans to extend beyond marketing over time. "We are already pulling data for sales teams and e-commerce teams," he said, and it is also eyeing up a move into providing data reporting tools for the finance sector.
"Pre-IPO" rounds in the context of this latest fundraise is about bringing in institutional investors who will also be a part of the IPO process.
“We are long-term investors who look for companies we like and hold them for a long time. We were impressed with the size of the global opportunity and the team’s ambition to build a large software company," said Jannis Kitsakis, senior portfolio manager at AP4, in a statement.
“Funnel has shown strong, predictable growth with impressive go-to-market metrics and a global footprint," added Fredrik Konopik, Investment Director at Stena Sessan. "We feel that the company is well positioned for the public market in Sweden.”