Listed tech investment company Bailador has upped the valuation of open source data technologies company Instaclustr by 42 per cent, as it continued its rapid growth during the pandemic.
Instaclustr, started in 2013 by Benjamin Bromhead, Adam Zegelin, Doug Stuart and Peter Lilley, gives businesses a platform that helps them host and support applications that require mass amounts of data and run using multiple open source tools like Facebook's Cassandra, Kafka and Elasticsearch.
Bailador co-founder David Kirk says Instaclustr is the second largest investment in its portfolio. Christopher Pearce
The valuation upgrade from Bailador makes its Instaclustr stake worth $27.1 million. This is the second biggest investment in its portfolio, after hotel booking company SiteMinder, a stake Bailador believes is worth $82.5 million.
Speaking to The Australian Financial Review new Instaclustr chief executive Peter Lilley said the business had been growing at 70 per cent year-on-year since launching. He is taking on the CEO role from Peter Nichol, who is joining the board.
Thanks to COVID-19, that growth rate is expected to slow to 35 per cent for 2020, but Mr Lilley said he was confident this would bounce back and had a long-term forecast of 50 per cent to 70 per cent annual growth on average.
"Open source adoption is one of the highest growth markets around data services and database systems. It's driven by the behemoths like Amazon Web Services and Microsoft Azure moving to deliver open source offerings on their cloud platforms," he said.
"It's gaining steam because of the fact that it's lowering total cost of ownership for organisations that consumed monolithic legacy licensing models.
"[Through COVID-19] we've lost nothing in terms of what we've been able to achieve in engineering our platform and the roll out of new features and capabilities. Our expectation is that growth will return and exposed sectors will begin to recover."
While the business services some customers in hard hit sectors like travel, many of its users are also in hot sectors like computing gaming and online delivery and logistics.
These customers, Mr Lilley said, have more than made up for the fall in revenue from its users in exposed industries.
"We started out [in 2013] with $US5000 a month in revenue and now we're doing $US1.5 million a month in recurring revenue," he said.
"We're now winning new business off the pandemic ... We're cracking into new opportunities to transform large enterprises to use open source tech and that will be the growth engine for the company."
In 2018 Instaclustr raised $US15 million, in a round led by New York venture capital fund Level Equity, alongside existing investors including Bailador and Our Innovation Fund.
Bailador partner and co-founder David Kirk said in the year since it had re-valued its Instaclustr stake, the company had improved its position in the market and added a suite of new technologies to its platform.
"We expect continued strong growth. It's total addressable market has grown strongly, as big data accumulates and the companies using the data have gotten larger," he said.
"Open source technologies are also becoming more mainstream."
Reflecting on Bailador's whole portfolio, Mr Kirk said companies like online retailer Brosa and online mortgage broker Lendi had excelled during COVID-19, while Rezdy (online booking software for tours & attractions) and SiteMinder had taken the biggest hits.
"[But] SiteMinder has 90 per cent subscription revenue, so it's not exposed in the same way as other businesses in the travel industry ... and Rezdy also has 70 per cent subscription revenue, but it's had a harder hit from tourism and has managed to get its cost base down."