Melbourne-based data-mining start-up Kaggle has secured $US11 million in funding from a raft of high-profile investors, including PayPal co-founder Max Levchin who will act as chairman.
Kaggle, founded by Anthony Goldbloom, Jeremy Howard and Nicolas Gruen, uses the internet and social media to host online data analysis competitions to solve data problems for consumers.
Up to 17,000 data specialists develop mathematical equations for Kaggle in open competition for prizes and recognition on Kaggle’s board. Clients include NASA, Ford, Wikipedia and Deloitte.
The company has secured $US 11 million in funding, selling off an undisclosed percentage of the business to investors including Index Ventures, Khosla Ventures and SV Angel.
PayPal co-founder Max Levchin has joined the company as an investor and chairman, while other investors include Google chief economist Hal Varian and tech entrepreneur Gil Elbaz.
Howard, a former consultant at McKinsey & Co and founder of email provider FastMail, would not reveal the valuation achieved by Kaggle in its Series A financing.
However, the calibre of the investors suggests Kaggle is viewed by many as seriously hot property, especially since it moved its operations to San Francisco.
“It is quite amazing who has come on board. [The investors] see so many clones of existing companies that when they saw Kaggle, everybody wanted in,” Howard says.
“Kaggle is in a space where there is really only room for one player. It is kind of like an eBay situation where one company takes all.”
Kaggle’s staff numbers will now rise from just a handful to more than a dozen as the company rolls out new competitions for new customers.
The company receives a fee for running the competitions and for making company data anonymous so that it can revealed on the internet.
The largest prize on offer is $US3 million put up by Californian company Heritage Provider, which wants a better mathematical model for predicting when patients need hospitalisation.
Soon, the top performers in data contests will be invited to participate in a private Kaggle arena, with guaranteed prize money and incentives for participants.
This closed contest field will likely appeal to banks, insurers and government agencies, which will be able to demand privacy safeguards and confidentiality clauses.
According to Neil Rimer, who joined the board from Index Ventures, companies are handing more data than ever before but are struggling to extract actionable results.
“Kaggle has created a real solution to the big data problem,” Rimer told The Australian Financial Review.
“Their model is changing the way data is used to run more profitable businesses, to solve large social problems and to find answers to some of the world’s most difficult questions.”