Data solutions startup Instaclustr has closed a $20.8 million investment round and is pegged to spark global growth from its humble Canberra HQ.
The funding round was led by New York-based private investment firm Level Equity and, according to co-founder Doug Stuart, will also open doors to expansion into North America.
Launched in 2013, originally as a data marketplace, Instaclustr evolved into a Software-as-a-Service platform to support the technologies required for managing data, after the founders realised there was no such service for them.
Stuart tells StartupSmart the business now counts Australian startup success story Atlassian among its “varied and global” client base, and has seen revenue growth of 300% over the past 24 months.
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Canberra born and bred
Instaclustr has based itself in Canberra, rather than the more well-known startup centres of Sydney or Melbourne, mainly because the four founders are “born and bred here”, Stuart says.
Stuart and co-founder Peter Lilley previously ran a company together in the capital city, and the other co-founders Ben Bromhead and Adam Zegelin also “have a network here”, Stuart adds.
However, Stuart says Australia’s capital is often overlooked as a hub for startups. Instaclustr received support from the city’s Entry 29 startup co-working space and from the Canberra Innovation Network, which he says has been “very supportive of us from the beginning”.
Equally, there’s a deluge of tech talent coming out of the city’s universities, meaning startups can “hire young and promote”, bringing on board “highly technical people with great skills sets”, he adds.
Canberra is also Stuart’s personal choice in terms of quality of life. The city is easy to get around and “such a great place for bringing up a family”, he says.
“People who come here to live really don’t want to move,” he adds.
“We like it to be a little bit under the radar, but more and more it’s a fantastic place.”
This latest capital raise is all about growth, Stuart says. Instaclustr will invest in its development and open-source teams in Canberra, building capabilities and working on new technologies “that are complementary and integrate well with the solutions we already have”.
The startup will also invest in marketing efforts, and build on its overseas presence — adding to existing offices in California and the UK.
Instaclustr’s international growth will be based around where its customers are, Stuart says, and currently around 80% of the startup’s clients are North American.
“We founded and built the company on the cloud,” he says, which means products can be deployed from anywhere.
“Local presence is about helping with adoption and growth,” he adds.
The startup’s next move will likely be to open an office on the east coast of the US, either in Boston or New York.
Although Instacluster “canvassed wide” in the fundraising process, having New York-based Level Equity lead the round was partly “about the vision and the fit, and understanding for the type of company we were”, says Stuart.
The investment firm brings knowledge of the B2B business model, experience working with companies like Instaclustr, and a knowledge of the US market.
“You can’t beat that expertise … the knowledge of the markets you’re in,” Stuart says.
This is a significant raise for Instaclustr, and the founders have big plans for the funds, but Stuart points out that it was “five years in the making”, with smaller raises and support from other avenues in between.
He advises other startup founders to be patient, and focus on working on the fundamentals of their business and meeting key metrics before they start the fundraising process, allowing themselves and their startup to get better with time.
“You can’t just turn around and raise this type of money off the back of limited time and exposure,” he says.
“It’s a journey,” he adds.
“There are a lot of knock backs.”
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