We are in the middle of the cloud wars with AWS, Oracle, Google, and AWS battling market share. New technological advancements like AR and 5G, coupled with the increased demand for cloud services as a result of COVID-19 are giving newer entrants a significant market opportunity in this $260B market. Founded by a number of Google veterans in 2015, Cockroach Labs is an open-source geo-distributed SQL database powering the next generation of global applications. This geo-distributed architecture prevents datacenter-level failures and allows enterprises to ensure compliance with privacy restrictions in various jurisdictions.
AlleyWatch caught up with CEO and Cofounder Spencer Kimball to learn more about how Cockroach Labs enables global enterprises, the company’s impressive growth and, latest round of funding form some of the Silicon Valley’s most respected investors. Cockroach Labs has now raised a total of $195.1M across six rounds.
Who were your investors and how much did you raise?
This $86.6M Series D funding round was co-led by Altimeter Capital and BOND with participation from Benchmark, GV, Index Ventures, Redpoint Ventures, Sequoia Capital, and Tiger Capital.
Tell us about the product or service that Cockroach Labs offers.
Cockroach Labs enables organizations to migrate and manage critical transactional data in the cloud with its next-generation SQL database, CockroachDB. CockroachDB can use cloud resources within a datacenter for scale, resources across many data centers for superior business continuity, and resources across continents to domicile and process data close to customers for enhanced privacy and instantaneous user experience.
All three of our cofounders worked at Google for a decade-spanning 2002-2012. Google was an early leader in distributed database technology. In the aughts, Google’s data center footprint was immense compared to what was available to everyone else. Now, even a startup has access to a similar range of resources via the global public cloud. We started Cockroach Labs to bring this new technology to the world as open-source software.
How is Cockroach Labs different?
The big differentiator for CockroachDB is that it’s a geo-distributed SQL database. The “geo” part of that description is important. It’s what allows CockroachDB to up the ante significantly in terms of how businesses cope with data center-level failures (hint: they’re no longer disasters). It’s also what allows CockroachDB to provide the foundation for the next generation of global applications which can keep data and cloud-based logic within customers’ legal jurisdictions while providing instantaneous user experience. This will be crucial for enabling 5G use cases like AR/VR, autonomous driving, interactive media, and gaming, etc.
What market does Cockroach Labs target and how big is it?
The worldwide public cloud services market is forecasted to grow nearly 20 percent in 2020 to a total upwards of $260B, according to an analyst firm. It also expects that by 2022, 75 percent of all databases (which saw 18.4 percent growth in revenue in 2018) will be deployed or migrated to a cloud platform. With double-digit growth in the database market, this represents a larger move away from legacy players like Oracle as companies look for more nimble cloud-native databases. Amidst such growth, the greatest innovation is coming from companies that arose out of the open-source software movement, many of which are poised to disrupt slower-moving players operating on either decades-old technology or on an assembly of services cobbled together via acquisition. As the world’s first cloud-native, distributed SQL database, Cockroach Labs is the only player in the space built from the ground up with the needs of the global enterprise in mind.
What’s your business model?
Our business model was traditionally open core, but that has expanded with the release of our cloud-based service, CockroachCloud, which provides CockroachDB as a service.
How has your business changed as a result of COVID?
Stay-at-home orders resulting from COVID have dramatically increased demand for many businesses, putting increasing stress on the modern tech stack. Economic uncertainty is encouraging greater efficiency, setting the stage for further migration away from legacy, closed-source data platforms to modern, distributed, cloud-native tools. To better support customers as they change to meet these new requirements, we are facilitating growing investments in R&D.
What was the funding process like?
Raising funds in the midst of a pandemic is definitely a unique experience, but luckily, we were able to focus on strengthening our relationships with existing investors. Kevin Wang at Altimeter has been working with us for years now and there is significant alignment between his ideas about cloud infrastructure and the opportunity Cockroach Labs is pursuing. We were also very pleased to add BOND to the mix, given its reputation and resources.
What are the biggest challenges that you faced while raising capital?
Because we have a strong network of existing investors looking to stay active as we grow, raising this round was fairly straightforward. It also helped that we have been cultivating relationships with new potential investors over time, starting conversations long before we were looking to raise capital. With these conversations being generally on par with a round of this size, the most challenging aspect was raising strategically – balancing the company’s needs and market opportunity with the amount of funding, as opposed to simply asking for as much cash as possible.
What factors about your business led your investors to write the check?
With recent investments in companies like Confluent and Snowflake, we’re seeing huge market disruption as enterprises move to the cloud and build on a modern tech stack, replacing legacy companies, who are struggling to adapt. Cockroach Labs is leading this next evolution with a world-class team, ambitious vision, and a transformative product. Investors recognize that having a database company that can service the application-based companies in their portfolio is going to benefit them in the long run.
What are the milestones you plan to achieve in the next six months?
This round of funding will facilitate Cockroach Labs’ growing investments in R&D to better support customers as they evolve to meet rapidly changing tech requirements. We’re also looking forward to continuing database market disruption and helping organizations navigate cloud migration with the resiliency, accuracy, and speed of data required for businesses to take advantage of the cloud.
This round of funding will facilitate Cockroach Labs’ growing investments in R&D to better support customers as they evolve to meet rapidly changing tech requirements.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Run lean. If that’s not possible, consider venture debt as an option. We never stop talking to prospective investors. Capital is much easier to raise when you have good relationships in place and understand how a new investor will complement your network and support your opportunity.
Where do you see the company going now over the near term?
The conditions of this pandemic require many companies to support a mainly distributed, completely remote workforce, which puts immense pressure on the enterprise to make the leap to the cloud now, as quickly and effortlessly as possible. CockroachDB was purpose-built for mission-critical, data-intensive, cloud-deployed applications, and as a result, we are seeing a tremendous increase in demand for our services from companies small and large looking for bulletproof resiliency, effortless scalability and an overall more cost-effective platform.
What’s your favorite restaurant in the city?
Our office is right next to Eataly, so I miss taking my team to the SERRA by Birreria restaurant up on the roof.
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