What Is Going On with All This Investment?

In the midst of a pandemic, Dremio has raised over $200 million in a span of 11 months and now sits on a valuation of $1 billion. That’s enough to make you tilt your head and squint, trying to figure out exactly what is happening. Our founder wrote an excellent post on what this means from a product perspective. Here I will focus on the general business angle and from that perspective, I believe there are a combination of things that are interesting to look at both separately and as a whole.

First, investors are very good at identifying market-changing trends. It’s what they spend their entire careers doing, and they have very large data sets of companies and customer networks to find the signal through the noise. When they see that a market is reaching a tipping point, there is a sense of urgency to act quickly and aggressively.

Second, today’s technology markets move very fast. Perhaps one day we may return to the model of slow-and-steady growth over 10-15 years, but that’s not the way it happens today. Instead, winning companies grow very quickly and aggressively, which requires a lot of operating capital to execute successfully.

Third, the best talent wants to be at a winning company, and while investment isn’t a sufficient cause for winning a market, it is a necessary one. The pandemic has heightened this sensitivity when it comes to startups because, despite record highs in the stock market, there’s a sense that a few financial bumps could still manifest as we begin the slow emergence into the post-pandemic economy.

Fourth, the ecosystem can only handle working with a handful of new companies and technologies every year, and one obvious selection criteria is financial fitness. If cloud providers and other multi-billion dollar companies are going to spend significant time and resources partnering with a vendor, they want the security that their investment will not be short-lived. Knowing a company is very well funded gives them extra confidence in going the extra mile as a key partner.

Fifth, and finally, similar to talent and partners, customers also want to know they’re doing business with a company on whom they can depend. There are so many positive reasons to work with a startup but, let’s face it, there is also some risk with financial resiliency. This is particularly true of companies like Dremio that drive mission-critical analytics. Customers are more willing to strategically engage with a company when they know there is no immediate risk of insolvency, even if the market were to turn bearish for a stretch.

Those five reasons contribute to very large investments being made in startups in general but don’t answer the question of how a particular startup is chosen. In our case, Dremio is attractive to investors because we have:

For those reasons, investors firmly believe that Dremio will put a very large dent in a very big market. Consequently, our investors have made us one of the best capitalized companies in our market so that we can aggressively accelerate and scale our business, continuing to bring customers reimagined data lake functionality and experiences.

It has already been an incredible journey, and now it’s about to get even better for our customers and partners.