More Infra, Less AI

Harness, Alkira, WEKA, Vercel, Sigma, PolyAI, Voxel51, LogRhythm, Exabeam, Palo Alto Networks, QRadar

Almost made it to the end of the week without any major AI funding rounds....almost!

Harness Raises $150 million from SVB and Hercules Capital

Serial entrepreneur, founder of Unusual Ventures and aspirational hero to countless desi-immigrant entrepreneurs, Jyoti Bansal has raised $150 million in financing from Silicon Valley Bank and Hercules Capital . This round of funding was, curiously, all debt, so let's discuss that for a minute.

Harness is a DevOps platform and competes with the likes of 微软 's GitHub , GitLab , offerings from Atlassian , CloudBees , CircleCI , Perforce Software , LaunchDarkly , JFrog and dozens of others. Jyoti Bansal founded the company a few years after selling AppDynamics to Cisco for $3.7 billion literally the day before the company was supposed to go public in a very highly anticipated IPO. I was at J.P. Morgan at the time (one of the bookrunners) and remember when the news broke. AppDynamics was advised by Goldman Sachs, Morgan Stanley and Qatalyst leaving JPM and other bookrunners without much to show for after months of work - but that is how it goes.

Getting back to the funding, debt rounds typically show up when companies have a scaled topline, reasonably strong margins but slowing growth. According to the press release, Harness is already doing over $100 million in revenue (or ARR? not clear) from a base of 600+ customers but it does not mention current growth. Press releases are marketing documents and they always want to highlight the most attractive metrics. I'm pretty sure the growth here is not something to sneeze at, but entirely possible it is taking a breather.

A bigger question for me is why did the company raise capital now? Harness had raised a total of $425 million before this latest debt round. Their last round (Series D) was in April 2022 at a $3.7 billion valuation. It consisted of $175 million in equity and $55 million in debt. With the latest $150 million in debt, the company's debt load goes to $205 million, though it is entirely likely they rolled over the last $55 million into the current $150 million. Whether it is $150 million or $205 million, I can tell you that is a sizable debt load for a growth focused company with $100 million in revenue (I'm ignoring structure and terms here that could possibly make a material difference.)

While uncommon, this is by no means a unique deal. A prior example of a DevOps company with a similar financing trajectory is CloudBees . CloudBees raised a $62 million mixed debt and equity round in 2018 with equity participation from my friend Dan Williams of Delta-v Capital and the debt portion from Golub Capital . The company then raised a substantially bigger Series F bringing in $150 million in equity and $95 million in debt. Investors in the Series F included the private credit arms of Goldman Sachs Asset Management and 摩根士丹利 . Typically these types of rounds have been characterized as "last round before IPO" - but markets have evolved over the last decade and going public, especially in current conditions, is a very tall order.

Jyoti is a very accomplished executive and I expect the latest funding to give him sufficient breathing room as he marches towards his stated goal of a $1 billion topline (which seems like the new north star for ambitious CEOs.) Watch this space.

Network-as-a-Service Provider Alkira, Inc. Raises $100 million

Alkira, Inc. has secured $100 million in Series C funding, bringing its total funding to $176 million. This round was led by Tiger Global Management , with additional investments from Dallas Venture Capital , Geodesic Capital , LIAN Group , and NextEquity Partners alongside existing investors Kleiner Perkins , Koch Disruptive Technologies , and Sequoia Capital . Alkira, provides on-demand network infrastructure as-a-service, which sounds a bit like the next-generation of SD-WAN / SASE to me? Here's a graphic explaining the service from the company's website -

Alkira has pretty good pedigree - it was founded by Amir K. and Atif Khan who previously collaborated on Sequoia Capital backed SD-WAN pioneer Viptela , which was acquired by 思科 for $610 million in 2017.

Data Management Platform WEKA Raises $140 million

WEKA a data management platform has raised $140 million in a Series E funding round, doubling its valuation to $1.6 billion. The round was led by Valor Equity Partners with participation from 英伟达 , Norwest , Micron Ventures , Qualcomm Ventures , Hitachi Ventures , and others.

WEKA seeks to address the common challenge of disorganized and siloed data that hampers AI initiatives. The platform provides a parallel file system capable of handling diverse data sources and types, optimized for high-performance computing, machine learning, and AI workloads across on-premises, public, and hybrid cloud environments.

CEO Liran Zvibel and co-founders Maor Ben Dayan and Omri Palmon , who previously built and sold data storage startup XIV to IBM , founded WEKA in 2013 to create a more efficient data infrastructure. WEKA 's architecture reduces data copying time, accelerating AI model training for over 300 customers, including Stability AI, many domestic and foreign government agencies and 11 of the Fortune 50.

WEKA has crossed the $100 million ARR mark and claims to have a line of sight to cash-flow break even by the end of this year.

Vercel Raises $250 million at a $3.25 billion Valuation

Vercel , a Frontend Cloud platform, has raised $250 million in a Series E funding round, bringing its valuation to $3.25 billion. The round was led by Accel , with participation from existing investors CRV , GV (Google Ventures) , Notable Capital , Bedrock , Geodesic Capital , Tiger Global Management , 8VC , and SV Angel . Vercel plans to use the funds to enhance AI-driven and security features for its web application platform.

Vercel's platform leverages Generative AI to accelerate frontend / UI infrastructure development by allowing developers to use simple instructions to create initial versions of their desired web applications -

The company recently surpassed $100 million in annualized revenue and its Next.js technology is used by over a million developers monthly.

The new funding will support the development of Vercel's Generative UI product, v0, and its AI SDK, both designed to simplify AI application creation. Vercel also aims to bolster its enterprise-grade security offerings, which already mitigate nearly a billion threats weekly, to ensure robust protection for its customers.

Cloud Analytics Provider Sigma Raises $200 million

Sigma , a cloud analytics solution provider, announced it has raised $200 million in Series D funding to further its innovations in AI infrastructure, data application development, and enterprise collaboration. The funding round was co-led by Spark Capital and Avenir Growth Capital, with additional investments from new investor NewView Capital and previous investors, including Snowflake Ventures and Sutter Hill Ventures . While actual valuation was not disclosed, the release does mention that the Series D funding was raised at a valuation 60% higher than Sigma's previous round three years ago.

Sigma's platform integrates with cloud data warehouses and allows users to perform data analysis without coding. Over the past year, Sigma has achieved record revenue growth, broadened its client base, and expanded its partner network. The company claims it is enabling enterprises to gain new value from their cloud transformations by enhancing the scale and security of business intelligence (BI) and introducing advanced features such as warehouse writeback, real-time collaboration, and application development.

Generative AI Powered Voice Assistant Platform PolyAI Raises $50 million

Generative AI powered conversational voice assistant platform PolyAI has raised $50 million in a Series C funding round, bringing its total funding to over $120 million. The round included new investors Hedosophia , 英伟达 Ventures and Zendesk , alongside existing investors Khosla Ventures , Georgian , Point72 Ventures , Sands Capital , and Passion Capital .

Founded in 2017, PolyAI benefitted when the COVID pandemic accelerated digital transformation in customer service, leading to a higher adoption rate of conversational AI solutions. The company serves nearly 100 enterprise customers, including notable companies like 联邦快递 , Pacific Gas and Electric Company , Caesars Entertainment , 万豪酒店 , and UniCredit . One significant deployment includes a multilingual enterprise voice assistant supporting 12 languages and performing the work of over 1,000 employees.

PolyAI 's goal is to handle over half of all customer service calls within the next five years. The company emphasizes a platform that combines generative AI with user experiences tailored for enterprise needs, offering smart workflows, actionable insights, quick integrations, and robust support for voice automation.

The company's clientele spans various industries, including logistics, banking, hospitality, healthcare, and telecom.

AI Data Workflow Platform Voxel51 raises $30 million from Bessemer Venture Partners

Voxel51, a company targeting challenges in AI-related data workflow has raised $30 million in a Series B funding round led by Bessemer Venture Partners. Voxel51 addresses AI data management challenges by offering an orchestration platform for visual data, enabling AI/ML teams to centralize, manage, and prepare large datasets from sources like autonomous vehicles and medical scans.

The company’s flagship product, FiftyOne, is an open-source tool that allows developers and data scientists to visualize, curate, and analyze complex video datasets. This platform addresses the growing need for efficient video data workflows, enabling organizations to unlock insights from their video content. With the new funding, Voxel51 plans to expand its team, enhance its product offerings, and continue driving innovation in the field of video data analysis.

SIEM Consolidation

It was also consolidation week for SIEM with two big announcements -

1. LogRhythm is merging with Exabeam . Two good companies that seem to have hit a plateau in terms of growth. The combination is synergistic and gives the combined entity greater staying power.
2. IBM is unloading its QRadar assets to Palo Alto Networks .

I recommend commentary from Forrester on the two deals here - LogRhythm / Exabeam and QRadar / Palo Alto Networks.

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My day job is advising growing companies on fundraising and M&A. If you are an investor or entrepreneur I'd love to connect.