As open source database architecture continues to grow in popularity, one of the bigger developers in the area has picked up some funding to target the opportunity.
MariaDB Corporation, the company that develops solutions and contributes to the open-source SQL fork managed by the MariaDB Foundation, today announced that it has raised €25 million ($27 million) from the European Investment Bank (EIB), money that it plans to use to build out its sales team and more products for the platform, which today include the MariaDB Server, the MaxScale database proxy, the ColumnStore distributed data storage engine; and services like technical support, training and more.
Notably, the EIB is not a traditional VC, and this is not a typical Series C: it’s effectively a long-term loan, combined with some equity. “It is a (welcome) complementary alternative to traditional equity funding by PEs/VCs that often comes with more prescriptive terms,” said Kenneth Paqvalen, the CFO of the MariaDB Corporation. “It is attractive to us as it unlocks a significant amount of capital to fund our continued growth while at the same time keeping dilution to a minimum.”
The company and the EIC are both not commenting on valuation, however. “This kind of information was actually not relevant for our investment,” and EIB spokesperson said in response to the question.
According to a source, MariaDB in a recent equity funding round had a targeted selling price of between $200 million and $250 million. It’s unclear how that range would have changed in the last year or so, or how that related to valuations set by investors. The same source said that the current funding was picked up at a five percent devaluation to current shareholders.
This is the first time that the EIB has backed MariaDB, which was founded and continues to have offices in Helsinki, Finland (with its second HQ in Menlo Park).
It’s part of a bigger strategic push by the European Commission, under its Investment Plan for Europe, to increase investment in European businesses. Sometimes referred to as the “Juncker Plan” after EC president Jean-Claude Juncker, who introduced it in 2014, the target has been to invest at least €315 billion ($344 billion) in European businesses between January 2015 and December 2017.
Tech investments are not the sole recipients of Juncker Plan funding, but it’s a clear opportunity — particularly when you consider the relative scarcity of funding for growth rounds for European startups, many of which have found it easier to raise seed rounds here, but eventually look migrate their businesses to the U.S. in part to be closer to VCs who are willing to work with them (and fund them) for later stages.
“Developing new, innovative products requires sustained investment. I am delighted that the Investment Plan is unlocking finance to facilitate MariaDB’s development programme, that includes expanding their engineering team as well as increasing international sales and marketing operations,” said European Commission VP Jyrki Katainen, who oversees jobs, growth, investment and competitiveness. “Focus on innovation and research as well as reaching out to new markets will help the company succeed in a highly competitive market.”
Today, there are some 12 million users worldwide of MariaDB databases, with customers including booking.com, HP, Virgin Mobile and Wikipedia using it across a variety of formats, from hybrid to public and private cloud deployments. MariaDB is also the default in major Linux distributions like Red Hat, Ubuntu and SUSE, adding a further reach of 60 million users.
SkySQL was originally founded in 2009 and merged with Monty Program Ab in 2013. Monty Program was founded by Michael “Monty” Widenius after he sold his previous company MySQL to Sun Microsystems (now owned by Oracle) in 2008 for $1 billion — a deal that marked a turning tide in how open source was viewed as a viable business model.
Monty eventually left SkySQL to run the non-profit MariaDB Foundation (MariaDB and MySQL were both named after his daughters, Maria and My). He returned to MariaDB in January 2016 as CTO at the same time that enterprise vet Michael Howard took the helm as CEO (and the company raised $9 million from Intel and California Technology Ventures).
Howard was in part brought on to help shift the company’s center of gravity to the U.S. (where he is based) and to bring on more of a business focus to the organization with security and other tools built on top of the open source framework, which is what the company will continue to develop along with generally growing the business.
“The investment from the EIB accelerates our ability to expand our product capabilities and continue to develop features that make MariaDB the easiest to use, the easiest to extend and the easiest to deploy in any environment,” he said in a statement. “This funding is part of a multi-step strategy to strengthen MariaDB across Europe, America and Asia, and will help foster the next phase of growth for the company.” Indeed, when the company last raised $9 million, Howard described it to me as a “stepping stone” to the next, bigger round to double down on its plans.
The funding and continued growth for MariaDB is a sign of how open source databases are growing in popularity, but also of how investors are hoping to reap something from that trend. MariaDB, quoting research from Gartner, said that 70 percent of all new in-house apps will be developed on open-source databases, and 50 percent of existing commercial databases will be migrating to open source by 2018. Overall, open source penetration has risen to 45 percent versus 35 percent four years ago, according to DB-engines.
But MariaDB is not the only player in the space: open source competitors include MongoDB, MySQL and Hive; while DynamoDB and Microsoft SQL are among the proprietary offerings that are also vying for the same business as MariaDB.
The wider database market opportunity is a sizeable one: $50 billion by 2017 according to figures from IDC. This round of funding effectively positions MariaDB as one of the stronger players in this space out of Europe.
“We are pleased to be partnering with MariaDB in this breakthrough operation as it will enable the EU bank to support a European software company particularly strong in innovation and with significant growth potential,” said EIB VP Ambroise Fayolle. “This is also what the Investment Plan for Europe is about: strengthening Europe’s global competitiveness by supporting high-skilled employment opportunities and enhancing Europe’s position as a major technology supplier.”