Infinite revenue multiples

Airbyte is an open-source startup that assists customers with moving data. This is a huge market because there’s so much data and it doesn’t stay there. Companies want it to be moved around. It is not easy work. Airbyte is a market leader in extract, load, and transform (ELT).

The company offers two services: a free open-source product and a paid one. Airbyte’s paid version includes all the enterprise-friendly tools you would expect, such as SSO. Hosting. This is a fairly standard OSS play, right?

Now back to the money. Airbyte raised a seed round early 2021 according to Crunchbase data. In May, the company raised Series A. The company had raised more than $30million this year. That was quite a large sum.

It was also a small sum when compared to the next step. Airbyte has closed a $150m Series B this week at an approximately $1.5 billion valuation. Even better, revenues of the company today are less than $1,000,000 (an annual recurring revenue or ARR).

I joked via Twitter about how the company was making a profit multiple of 1,500x. That was what people found funny.

It turns out that it was only half of the joke. Airbyte news was dropped and I learned that the revenue figure is likely to be a little lower than $1 million than I thought. Airbyte has an ARR multiple that is way higher than 1,500x.

It’s basically infinite. This is incredible and where venture capital has been going since 2021. What does that mean? Well:

In recent years, larger funds have invested earlier in the startup cycle to deploy capital and get allocated in later rounds of high-potential companies.

This means that startups are now able to raise large rounds of capital based more on FOMO and revenues than ever before.

Then came 2021, when even greater money was available, apparently, and these two points were further exacerbated.

While I was told that Series B rounds were done at six-figure ARR, back in 2019 it was a rule by thumb that to raise Series A, $1,000,000 in ARR was the minimum.

Airbyte is proving that there is no limit to how much a company’s revenue base can be valued.

Airbyte managed to accomplish this feat. My suspicion is correct. Open source companies have a great set of metrics that are not revenue-related that they can present to investors when raising capital. An example of this is usage and contribution information to its open-source project. My guess here? Airbyte has a high level of community usage, even though its paid products may be more than nascent.

Is the Airbyte dumb? We don’t know! We can only say that there was sufficient data someplace to allow investors to feel confident in putting nine-figures into the company at a ten figure valuation, despite having far fewer numbers of revenue.

This is a positive sign for open-source startups. It is, I believe.

Finally, Juna

To discuss his startup, I met up with June founder and CEO Peter Arrian. It is partnering with insurance companies to offer low-cost sexual health testing for those who are sexually active. The startup is combining DTC and health technology to offer young people a way to test for sexually transmitted diseases (STDs). This will allow you to test proactively instead of reacting to them.

While I don’t want to drag COVID into every situation, I wonder if people are more used to being tested these days. I’m off to have my nose swabbed if that’s how COVID tests work. Modern life is full of pleasures.

Juna is great in two ways. First, Juna’s product is awesome and something I would use if I were younger. Second, Juna’s marketing strategy is amazing. It’s common to hear about brands using social media to attract attention. Well, Juna is

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