Sydney-based customer research startup Dovetail has secured $5 million in funding, including repeat backing from the likes of Blackbird, Culture Amp founder Didier Elzinga and Mike Cannon-Brookes’ Grok Ventures, as well as from an international VC firm.
SmartCompany caught up with co-founder and chief Benjamin Humphrey to talk international growth, an evolving market, and what it’s like to be at the centre of the flywheel of the local tech sector.
What is Dovetail?
Founded in 2017 as a side-hustle when co-founders Benjamin Humphrey and Bradley Ayers were working at Atlassian, Dovetail is a tool designed to help teams better analyse and glean insights from customer research.
The cloud platform collates research, design, analysis and insight, allowing project managers to pick out trends and patterns, creating summarised insights that can be shared with everyone in the organisation.
Humphrey doesn’t share any specific revenue growth stats. However he does say the startup makes “a decent amount of money”, and covers its own running costs.
Dovetail now has more than 1,700 paying customers, including the likes of the Boston Consulting Group, Harvard University, Canva, Cisco, Mastercard, and more.
Some 93% of those customers are based outside of Australia.
This latest raise follows a $4 million seed round, closed in February 2020. Since then, the business has grown from nine or ten people to 40, Humphrey tells SmartCompany.
Of course, the world has changed somewhat since then, too.
How has COVID-19 affected the business?
As a cloud collaboration business, Dovetail was pretty resilient to the COVID-19 crisis. As companies shifted to working from home, they saw value in that, the founder notes.
The startup also launched its enterprise plan product in May last year, which has been growing 20%, month-on-month.
“There’s obviously a market looking for this kind of product,” he says.
But also, in a changed environment, there’s an appetite for businesses to differentiate themselves and their products, in order to keep their own customers on board.
“To be competitive, companies need to be really good at trying to understand exactly what their customers are after, what the market needs … and also any pain points and problems they have.”
Who are the investors?
The latest chunk of funding comes from all existing investors.
The round was led by US firm Felicis Ventures, and also included backing from influential Aussie VC firm Blackbird Ventures, as well as from Grok Ventures, the VC firm of Atlassian co-founder Mike Cannon-Brookes.
Didier Elzinga, co-founder and chief of Aussie unicorn Culture Amp, also invested again.
The flywheel effect
Dovetail is headed up by Atlassian alumni and has secured Aussie tech leaders as significant backers, as well as attracting international investors.
We often hear about the flywheel effect in the local ecosystem, as tech success breeds more tech success. There’s arguably no better illustration of that than Dovetail.
And, as Humphrey notes, investment from Blackbird offers access to advice and support from their other portfolio companies.
He’s seen the ecosystem grow considerably even since 2013 when he joined Atlassian, he says. And Australian businesses are increasingly attracting investment from the US.
“It’s quite a thriving scene,” he says.
“The network is really strong.”
Humphrey says the startup didn’t necessarily need another funding injection.
“It’s a very capital-efficient business,” he notes.
The raise, however, came about through conversations with the team at Felicis Ventures, which was looking to increase its stake and its partnership with Dovetail.
It will also allow the team to establish a presence in North America, where some 52% of its customers are located. That rollout was originally planned for 2020, but was delayed due to the pandemic.
Humphrey’s is now planning on growing the team to 110 people by the end of next year.
“We want to grow the team faster than our revenue growth,” he says.
Looking further to the future, Humphrey won’t be drawn on pie-in-the-sky pipe dreams.
“If we can get to the 100 people mark without stuffing everything up that would be a good outcome,” he says.
This is also a business with the majority of its customers overseas. So, within the next few years, he’s hoping to have locations in the US, Europe and other regions, becoming a well-known and well respected software company.
“If we can follow in Atlassian and Canva’s footsteps, I think that will be a pretty good outcome,” he says.
But, for the most part, Humphrey’s focus is on growing strongly and steadily.
“We’re pretty humble,” he says.
“We’re mostly focused on building a good product, keeping the team happy, hiring and creating a good culture.
“If you focus on that stuff, the rest will come.”