6 ms·

Twilio announces $130M series E round

81 points by philnash 11y ago

andyidsinga 11y ago
that announcement is phony ;) seriously though, twillio is a great product, cheers to them!
pkaye 11y ago
How many rounds of funding can a startup have? For example, has any company ever reached H round?
- stingraycharles 11y ago
  Twitter has had a series G round: https://www.crunchbase.com/funding-round/6e6bf5db8245ac7b96059e4e0b99e08a https://www.crunchbase.com/funding-round/6e6bf5db8245ac7b960...
  - yuncun 11y ago
    Anyone know what the record is?
  - tricolon 11y ago
    Supposedly, Palantir's latest is a Series I: http://siliconangle.com/blog/2015/06/24/report-cia-backed-big-data-analytics-firm-palantir-raising-500m-series-i-on-20b-valuation/ http://siliconangle.com/blog/2015/06/24/report-cia-backed-bi... And Alien Technology raised a Series L: http://blogs.wsj.com/digits/2014/10/09/alien-technology-rfid-specialist-lands-series-l-funding/ http://blogs.wsj.com/digits/2014/10/09/alien-technology-rfid...
    - rory096 11y ago
      >Alien is not setting a record for venture fundings. VentureSource counts four U.S. companies since 1992 that had raised 13 equity rounds through the second quarter of this year. So at least 4 series M, too.
    - chrdlu 11y ago
      Actually, Palantir just raised a Series K... https://www.crunchbase.com/organization/palantir-technologies https://www.crunchbase.com/organization/palantir-technologie...
  - mooreds 11y ago
    Tendril (an energy/software startup in the Boulder area) has raise 8 rounds, though they don't call the last one an 'H': https://www.crunchbase.com/organization/tendril https://www.crunchbase.com/organization/tendril
- dvt 11y ago
  There is no upper bound. You can technically have more rounds than letters in the alphabet. But no one really does it due to diminishing returns.
- deleted 11y ago
  [deleted]
  - joshu 11y ago
    Huh? That's not how it works.
    - toomuchtodo 11y ago
      True; it'd be interesting to see Twilio's cap table.
      - joshu 11y ago
        It's true in general. Shares don't get smaller. Just the percentages of total ownership. Which doesn't matter if the share price is going up. (I am an early investor in Twilio)
- dopamean 11y ago
  I'm pretty sure LivingSocial has had around 10 rounds of investment.
- karmakaze 11y ago
  Made me question what's a startup? Blank and Dorf says it's an "organization formed to search for a repeatable and scalable business model" which doesn't place any limits.
- sharkweek 11y ago
  Pulled the data from the PitchBook platform on all companies that at one point (not necessarily their current status) saw a round letter between "H" and "J"- sorted by most recent deal. 64 total companies have seen this middle of the alphabet (there are certainly a few that have gone higher not included in this list). Honestly, I expect more companies to start pushing the round name higher and higher as private market preference is certainly trending in a big way. Here's a screen grab: http://i.imgur.com/V9gvpFs.jpg http://i.imgur.com/V9gvpFs.jpg
jakozaur 11y ago
Several years ago, they would just IPO. They seems to be in a great shape to do that: http://techcrunch.com/2013/06/07/twilio-raises-a-70m-series-d-as-they-consider-an-ipo/ http://techcrunch.com/2013/06/07/twilio-raises-a-70m-series-... http://blogs.wsj.com/venturecapital/2015/02/20/twilio-positions-itself-for-an-ipo-after-logging-100m-in-2014-revenue/ http://blogs.wsj.com/venturecapital/2015/02/20/twilio-positi... Yet another case of late stage private capital.
- x5n1 11y ago
  founders probably got liquidity.
- ChuckMcM 11y ago
  The tech crunch article has some good details, and no, I don't think they would be able to successfully IPO just yet, the reason is in the Tech Crunch article : "In February of this year, Twilio noted that it was adding $1 million in recurring revenue every seven days, having ended 2014 with a revenue run rate of $100 million. But like many quickly growing cloud startups, Twilio loses money. In the first half of 2015, the company booked $71.74 million in sales, with cost of revenue of $32.32 million. Those figures leave a gross profit of $39.42 million for the period. Deducting operating expenses and other costs, Twilio had a net loss of $16.370 million in the first six months of 2015." So the first half of the year was $71M in sales, and they are running at an operating loss. They are adding $1M in recurring revenue a week. And we know that it costs them roughly $450K to in costs to service that revenue (cost of revenue). If we add in $1M in recurring revenue a week, for 6 months that is and additional $26M in revenue, maybe $14.3M in additional income (subtracted off the $450K/million cost of revenue), their 'burn rate' or costs for the first half were 39M + 16M or $55M (that is $39M in gross margin and a $16M net loss), if they keep costs constant (don't add head count, same level of capital investment they had in the first half, etc) then we can guess that their costs for the full year would be about $110M, subtracted from their gross revenue (after paying cost of revenue) of $88M they end up losing about $22M for the year. You have a hard time IPO'ing if your business isn't paying for itself. And if it isn't paying for itself, you can't IPO if you can't clearly explain why it eventually will be paying for itself. So the multi-million dollar question which the CEO is no doubt mulling over, is that given the cost of revenue, and the company's costs to get that revenue, is there a point where they make money? In my napkin analysis I made a very charitable assumption that their additional revenue won't incur any additional costs, but that may be incorrect. They may (or may not) write off their equipment against revenue which is not unusual in accrual based accounting but their corp infrastructure and things like leased space come out of G&A. So either they have a story of how they reduce their costs to make money on existing revenue, or they have a story that new revenue adds more gross margin than costs it consumes, and plot an intercept path to operationally cash flow positive and then net cash flow positive. At THAT point they can IPO and stop thinking like a startup.
rjv 11y ago
Do early-round investors bank off of later ones? I don't really know anything about fundraising, so my perception is that money it just getting shifted around from one investor to the next.
- jonathanjaeger 11y ago
  Sometimes a small portion of a round is used to buy out previous investors or sell some founder/early employee shares, but that's not the point of a round like this. If it's not for growth of the company, that would be a bad sign.
  - grinich 11y ago
    Sometimes it's a much larger portion. For example, when Twitter raised its last pre-IPO round of $800 million, half of that immediately went to cash out early employees and investors. FB also did this when DST invested. Most venture funds aren't set up for the current timeline to liquidity (I'm sure to VC's chagrin). http://www.wsj.com/articles/SB10001424053111903520204576482351255849460 http://www.wsj.com/articles/SB100014240531119035202045764823...
- joshu 11y ago
  In this case, the later investors wanted to buy some early shares: http://techcrunch.com/2015/07/14/twilio-offers-early-shareholders-liquidity-in-repurchase-offer/ http://techcrunch.com/2015/07/14/twilio-offers-early-shareho... This is not always the case.
djloche 11y ago
Interesting to see that Bessemer Venture Partners isn't listed as participating in this round. They've been involved in all the previous funding.
- RobSpectre 11y ago
  Rob from Twilio here - the firms listed in the first two paragraphs are the new folks who are joining in this round, not the exclusive list of all participants. BVP did participate in this round - great team to work with. [edit] typo.
anantzoid 11y ago
Let's hope they use this to stabilize their systems and make it more reliable. Have been extensively using their service, and there are times when the SMS doesn't get delivered.
- RobSpectre 11y ago
  Very sorry to hear about your experience. Do you reckon you could reach out to rob [at] twilio? Keen to hear more about the deliverability issues you are experiencing.
- dazbradbury 11y ago
  I had the same issues. Ran a side by side analysis with Nexmo and Nexmo were winning. Contacted Twilio customer support with the data and they "changed some routes" and deliverability was much better, outperforming Nexmo by some margin. Lesson learned: Create a test case, then contact support with evidence. It's a lot more effort of course, but now I have a system which can flawlessly switch between services if one begins to fail, and Twilio were much more inclined to help!
gchokov 11y ago
Keep pumping.. all the way until series Z and then pop the balloon.
eonw 11y ago
Twilio is a great product in my opinion, i have used them in a number of large projects. I am surprised they aren't in the black yet. I figured streamlining and then reselling access to telephony and mobile networks would be pretty profitable.

81 points by philnash 11y ago

andyidsinga 11y ago

that announcement is phony ;) seriously though, twillio is a great product, cheers to them!

pkaye 11y ago

How many rounds of funding can a startup have? For example, has any company ever reached H round?

stingraycharles 11y ago
Twitter has had a series G round: https://www.crunchbase.com/funding-round/6e6bf5db8245ac7b96059e4e0b99e08a https://www.crunchbase.com/funding-round/6e6bf5db8245ac7b960...
- yuncun 11y ago
  Anyone know what the record is?
- tricolon 11y ago
  Supposedly, Palantir's latest is a Series I: http://siliconangle.com/blog/2015/06/24/report-cia-backed-big-data-analytics-firm-palantir-raising-500m-series-i-on-20b-valuation/ http://siliconangle.com/blog/2015/06/24/report-cia-backed-bi... And Alien Technology raised a Series L: http://blogs.wsj.com/digits/2014/10/09/alien-technology-rfid-specialist-lands-series-l-funding/ http://blogs.wsj.com/digits/2014/10/09/alien-technology-rfid...
  - rory096 11y ago
    >Alien is not setting a record for venture fundings. VentureSource counts four U.S. companies since 1992 that had raised 13 equity rounds through the second quarter of this year. So at least 4 series M, too.
  - chrdlu 11y ago
    Actually, Palantir just raised a Series K... https://www.crunchbase.com/organization/palantir-technologies https://www.crunchbase.com/organization/palantir-technologie...
- mooreds 11y ago
  Tendril (an energy/software startup in the Boulder area) has raise 8 rounds, though they don't call the last one an 'H': https://www.crunchbase.com/organization/tendril https://www.crunchbase.com/organization/tendril
dvt 11y ago
There is no upper bound. You can technically have more rounds than letters in the alphabet. But no one really does it due to diminishing returns.
deleted 11y ago
[deleted]
- joshu 11y ago
  Huh? That's not how it works.
  - toomuchtodo 11y ago
    True; it'd be interesting to see Twilio's cap table.
    - joshu 11y ago
      It's true in general. Shares don't get smaller. Just the percentages of total ownership. Which doesn't matter if the share price is going up. (I am an early investor in Twilio)
dopamean 11y ago
I'm pretty sure LivingSocial has had around 10 rounds of investment.
karmakaze 11y ago
Made me question what's a startup? Blank and Dorf says it's an "organization formed to search for a repeatable and scalable business model" which doesn't place any limits.
sharkweek 11y ago
Pulled the data from the PitchBook platform on all companies that at one point (not necessarily their current status) saw a round letter between "H" and "J"- sorted by most recent deal. 64 total companies have seen this middle of the alphabet (there are certainly a few that have gone higher not included in this list). Honestly, I expect more companies to start pushing the round name higher and higher as private market preference is certainly trending in a big way. Here's a screen grab: http://i.imgur.com/V9gvpFs.jpg http://i.imgur.com/V9gvpFs.jpg

jakozaur 11y ago

Several years ago, they would just IPO. They seems to be in a great shape to do that: http://techcrunch.com/2013/06/07/twilio-raises-a-70m-series-d-as-they-consider-an-ipo/ http://techcrunch.com/2013/06/07/twilio-raises-a-70m-series-... http://blogs.wsj.com/venturecapital/2015/02/20/twilio-positions-itself-for-an-ipo-after-logging-100m-in-2014-revenue/ http://blogs.wsj.com/venturecapital/2015/02/20/twilio-positi... Yet another case of late stage private capital.

x5n1 11y ago
founders probably got liquidity.
ChuckMcM 11y ago
The tech crunch article has some good details, and no, I don't think they would be able to successfully IPO just yet, the reason is in the Tech Crunch article : "In February of this year, Twilio noted that it was adding $1 million in recurring revenue every seven days, having ended 2014 with a revenue run rate of $100 million. But like many quickly growing cloud startups, Twilio loses money. In the first half of 2015, the company booked $71.74 million in sales, with cost of revenue of $32.32 million. Those figures leave a gross profit of $39.42 million for the period. Deducting operating expenses and other costs, Twilio had a net loss of $16.370 million in the first six months of 2015." So the first half of the year was $71M in sales, and they are running at an operating loss. They are adding $1M in recurring revenue a week. And we know that it costs them roughly $450K to in costs to service that revenue (cost of revenue). If we add in $1M in recurring revenue a week, for 6 months that is and additional $26M in revenue, maybe $14.3M in additional income (subtracted off the $450K/million cost of revenue), their 'burn rate' or costs for the first half were 39M + 16M or $55M (that is $39M in gross margin and a $16M net loss), if they keep costs constant (don't add head count, same level of capital investment they had in the first half, etc) then we can guess that their costs for the full year would be about $110M, subtracted from their gross revenue (after paying cost of revenue) of $88M they end up losing about $22M for the year. You have a hard time IPO'ing if your business isn't paying for itself. And if it isn't paying for itself, you can't IPO if you can't clearly explain why it eventually will be paying for itself. So the multi-million dollar question which the CEO is no doubt mulling over, is that given the cost of revenue, and the company's costs to get that revenue, is there a point where they make money? In my napkin analysis I made a very charitable assumption that their additional revenue won't incur any additional costs, but that may be incorrect. They may (or may not) write off their equipment against revenue which is not unusual in accrual based accounting but their corp infrastructure and things like leased space come out of G&A. So either they have a story of how they reduce their costs to make money on existing revenue, or they have a story that new revenue adds more gross margin than costs it consumes, and plot an intercept path to operationally cash flow positive and then net cash flow positive. At THAT point they can IPO and stop thinking like a startup.

rjv 11y ago

Do early-round investors bank off of later ones? I don't really know anything about fundraising, so my perception is that money it just getting shifted around from one investor to the next.

jonathanjaeger 11y ago
Sometimes a small portion of a round is used to buy out previous investors or sell some founder/early employee shares, but that's not the point of a round like this. If it's not for growth of the company, that would be a bad sign.
- grinich 11y ago
  Sometimes it's a much larger portion. For example, when Twitter raised its last pre-IPO round of $800 million, half of that immediately went to cash out early employees and investors. FB also did this when DST invested. Most venture funds aren't set up for the current timeline to liquidity (I'm sure to VC's chagrin). http://www.wsj.com/articles/SB10001424053111903520204576482351255849460 http://www.wsj.com/articles/SB100014240531119035202045764823...
joshu 11y ago
In this case, the later investors wanted to buy some early shares: http://techcrunch.com/2015/07/14/twilio-offers-early-shareholders-liquidity-in-repurchase-offer/ http://techcrunch.com/2015/07/14/twilio-offers-early-shareho... This is not always the case.

djloche 11y ago

Interesting to see that Bessemer Venture Partners isn't listed as participating in this round. They've been involved in all the previous funding.

RobSpectre 11y ago
Rob from Twilio here - the firms listed in the first two paragraphs are the new folks who are joining in this round, not the exclusive list of all participants. BVP did participate in this round - great team to work with. [edit] typo.

anantzoid 11y ago

Let's hope they use this to stabilize their systems and make it more reliable. Have been extensively using their service, and there are times when the SMS doesn't get delivered.

RobSpectre 11y ago
Very sorry to hear about your experience. Do you reckon you could reach out to rob [at] twilio? Keen to hear more about the deliverability issues you are experiencing.
dazbradbury 11y ago
I had the same issues. Ran a side by side analysis with Nexmo and Nexmo were winning. Contacted Twilio customer support with the data and they "changed some routes" and deliverability was much better, outperforming Nexmo by some margin. Lesson learned: Create a test case, then contact support with evidence. It's a lot more effort of course, but now I have a system which can flawlessly switch between services if one begins to fail, and Twilio were much more inclined to help!

gchokov 11y ago

Keep pumping.. all the way until series Z and then pop the balloon.

eonw 11y ago

Twilio is a great product in my opinion, i have used them in a number of large projects. I am surprised they aren't in the black yet. I figured streamlining and then reselling access to telephony and mobile networks would be pretty profitable.