ThoughtSpot on Nov. 15 revealed that it raised $100 million in venture capital funding, bringing its total valuation to $4.2 billion.
The funding round was the sixth for the analytics vendor (its Series F round), which has now raised $674 million in total funding. Most recently, ThoughtSpot, founded in 2012 and based in Sunnyvale, Calif., raised $248 million in August 2019, which at the time brought its valuation to $1.95 billion.
March Capital, a new investor in ThoughtSpot, led the vendor's Series F funding, with participation from previous investors Capital One Ventures, Fidelity, General Catalyst, GIC, Khosla Ventures, Lightspeed Ventures, Sapphire Ventures and Snowflake Ventures.
ThoughtSpot unveiled the new funding round the day before hosting Beyond 2021, its virtual user conference.
In the fall of 2020, ThoughtSpot made the decision to transform into a cloud-first vendor after initially prioritizing its enterprise platform for on-premises users.
At the time, it introduced ThoughtSpot Cloud, a SaaS version of its platform, and made that version its priority. Since then, it has added capabilities like ThoughtSpot One, a tool built for the cloud that enables natural language search and data sharing.
As a result of ThoughtSpot's pivot to the cloud, the vendor said that annual recurring revenue (ARR) from cloud products are up 250% over the past year, cloud products now make up half of its ARR, and 85% of new customers purchased cloud products rather than on-premises products.
That growth is part of what enabled ThoughtSpot to more than double its valuation in just over two years, according to CEO Sudheesh Nair.
"What we did is completely change the distribution layer, which is the cloud, and also the experience layer by releasing products that appeal to more than just business users," Nair said.
Initially, ThoughtSpot's aim was to enable business users with a search-based analytics platform. Over the past year, however, it has expanded its target audience to add developers and data analysts.
In addition, ThoughtSpot has broadened its customer base, according to Nair.
"We were really good at conquering large customers with the white-glove treatment, but in the last 18 months, we have built the product-led growth and midmarket motion that is necessary if you want to build a massive company," he said.
Sudheesh NairCEO, ThoughtSpot
Beyond ThoughtSpot's own moves, however, the capital market itself contributed to ThoughtSpot's valuation increase over the past couple of years, according to Doug Henschen, an analyst at Constellation Research.
Technology vendors are attracting massive investments, and valuations are soaring.
For example, Databricks raised $1.6 billion in August 2021, while Snowflake broke records with its IPO in September 2020.
"Venture capital is flooding the market and valuations are crazy," Henschen said. "The hard part for maturing companies and, certainly, post-IPO companies, is sustaining growth and continuing momentum while facing the scrutiny of public reporting."
As for what the added $100 million might enable, Henschen noted it could have a wide-ranging effect.
"More sales and marketing feet on the street, more developers, more innovation and, hopefully, more support for partners and customers," he said.
Meanwhile, Boris Evelson, an analyst at Forrester Research, said that beyond the vendor's own moves, the rise in ThoughtSpot's valuation may be the result of what's still possible rather than what's already been done.
Analytics use remains relatively low across most organizations, despite advances in no-code/low-code tools and augmented intelligence capabilities such as natural language processing designed to make business intelligence platforms easier to use.
Opportunity, therefore, is out there for vendors that can develop tools that truly extend the reach of analytics to more than just a small percentage of users.
"Even after 30 years of deploying BI platforms, enterprises at best enjoy 20% adoption rate -- as in no more than 20% of decision-makers who could be using BI platforms are actually using them," Evelson said. "The rest still rely on data and analytics pros for analysis. This may explain continued tremendous opportunities for BI vendors and such a high valuation for ThoughtSpot."
He cautioned, however, that independent vendors like ThoughtSpot might struggle to maintain their valuations if they can't differentiate themselves from tech giants such as AWS, Google and Microsoft that all offer their own BI products.
"BI technology is highly mature to a point of commoditization, and is a very busy market with dozens of vendors offering very similar functionality," Evelson said. "Given such commoditized tech, and pricing pressure from [huge companies], it'll be increasingly difficult for an independent BI vendor to maintain profitability. This side of the market does not support such high valuation."
With an additional $100 million in funding, ThoughtSpot said it plans to accelerate development in two primary areas.
The vendor introduced ThoughtSpot Everywhere, a platform for developers to build analytics applications that can be embedded into the workflows of end users, in December 2020.
Since its launch, the feature has consistently grown quarter-over-quarter by more than 100%, according to ThoughtSpot. The vendor will use part of the new funding to develop go-to-market sales and marketing strategies for ThoughtSpot Everywhere and to develop partnerships with SaaS providers and cloud platform vendors.
In addition, ThoughtSpot plans to use the funding to further product development. In concert with its user conference, the vendor unveiled the new ThoughtSpot Data Workspace and Spot Apps to enable application developers, and the vendor has more new capabilities on its roadmap.
The funding, however, goes beyond specifics, according to Nair. It has a psychological effect on customers and employees alike. It also adds to the possibility of expansion.
"The funding does a few things," Nair said. "First, it creates excitement in the customer base -- our valuation is an eye-catching thing customers can pay attention to. Second, our employees will be benefit because it allows us to hire and attract people. And third, this is a massive space and M&A is always a possibility, and a higher valuation helps with that too."