Married cofounders Barr Moses and Lior Gavish have a new billion-dollar baby in their startup Monte Carlo, which helps companies monitor their data.
Venture firm IVP led the $135 million Series D round for the San Francisco-based company, which is now valued at $1.6 billion. Although the round is being announced now, Monte Carlo closed the deal in January, before the brunt of the venture capital market downturn. Participation also came from past investors Accel, GGV Capital, Iconiq and Redpoint, which backed the company in rapid-fire rounds starting in September 2020. In all four cases, says Moses, who is CEO, VCs preemptively offered to bankroll Monte Carlo before the startup had begun to actively fundraise.
On why interest has been so intense, Moses says one need not look further back than earlier this month, when software company Unity Technologies held its quarterly earnings call. Unity announced that it was slashing its yearly revenue target by $110 million, causing its stock to tumble by 37% that day. The company attributed the loss to bad customer data, which led to incorrectly targeted advertisements. “There are more and more people using data to make decisions,” Moses says. “But can [they] actually trust the data?”
That’s what Monte Carlo can offer, she says. The San Francisco-based company wants to carve out a space in the modern data ecosystem around companies like Snowflake, Databricks, Fivetran and Dbt Labs by monitoring the data moving within those pieces of infrastructure. Monte Carlo’s software can identify broken and inaccurate data, similar to the way Datadog helps engineers monitor cloud applications. “Historically, data quality was something that companies tried to manage internally,” says GGV Capital managing partner Glenn Solomon, who sits on the board. “This was going to be a market creation exercise.”
Other companies have begun to attract VC interest by building “data observability” software. Lightspeed and Insight Partners are among backers in Acceldata (Series B); Sequoia and Coatue backed Bigeye (Series B); NEA and Amplify Partners are investors in Datafold (Series A); Tiger Global, CRV and Index Ventures are in on Superconductive (Series B). Monte Carlo’s investors contend that Moses and Gavish trailblazed the space and that it allowed Monte Carlo to take an early lead. “They’ve got more customers than probably all other companies combined in data observability today,” Solomon says.
Monte Carlo has 150 customers, including CNN, JetBlue and shoe company Asics. Redpoint managing director Tomasz Tunguz says his firm surveyed some users and found a “big surprise” that Monte Carlo was “consistently” the data tool for which they spent the second largest chunk of their budget after storage platforms like Snowflake, Databricks or Amazon’s Redshift. At Fox, Monte Carlo accounts for about 10% to 15% of the “tens of millions” spent on data infrastructure. The media company uses it to ensure reliability of 4,000 data sources; for example, it receives overnight TV reports—metrics measuring how many people tuned into different channels at different times—from third-party sources that may provide the data in inconsistent file formats or hours later than expected. Monte Carlo pinpoints the source of the issue and in some cases is able to automate a fix, says Fox’s chief technology officer Paul Cheesbrough. “I want all my data engineers building things rather than having to do troubleshooting,” he adds.
Moses and Gavish, who is CTO, founded the company in 2019 and began selling the product the following year. Since then, its annual recurring revenue has doubled each quarter, Moses says, though she would not provide any details on what that number looks like concretely. As a comparison point, Datadog is currently trading at a forward revenue multiple of 14.3x—to match that, Monte Carlo would need $110 million in revenue to grow into its new valuation. Pre-IPO startups typically have larger multiples than public companies as their investors provide a mandate to grow fast over maximizing revenue. But, a worsening market slowdown has led VCs to dole out less generous valuations, while increasing pressure for startups to generate sales.
Monte Carlo just dodged that newfound investor scrutiny by closing its round in January. “I don’t imagine they’ll be raising money anytime soon because under no circumstance might they need it,” says IVP’s Cack Wilhelm, who led the latest round. Moses says that, with five years of runway from the money already secured, she’s focused on long-term execution rather than thinking about the market. She plans on doubling to tripling the company’s 120-person headcount within the next year to help with building out the product. The software, strongest on detection of bad data, will next increase its feature set on prevention and resolution, Moses says.
“We’ve invested a lot as an industry to figure out how to collect data, transform data, analyze data,” she says. “Now let’s make sure that we can actually use the data—that you can actually trust it.”