Analytics startup ThoughtSpot just raised $20 million from $60 billion Snowflake — and it plans to IPO when it fulfills three goals

Sudheesh Nair ThoughtSpot

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Analytics startup ThoughtSpot plans to go public after it fulfills three goals and it just received a $20 million investment from cloud-data storage firm Snowflake to help it get there. 

With the new funding, announced Tuesday, ThoughtSpot plans to expand its sales and marketing efforts, as well as customer support as it takes on rivals like Salesforce’s Tableau, Google Cloud’s Looker, and Microsoft’s Power BI.

ThoughtSpot and Snowflake, which had a market cap of around $60 billion when markets closed on Monday, are also expanding their existing partnership. ThoughtSpot has now raised a total of $577 million, building off its $248 million funding round at a $1.95 billion valuation in 2019. It declined to disclose an updated valuation.

This investment pushes ThoughtSpot closer to an eventual IPO, CEO Sudheesh Nair told Insider, though it’s not in a rush.

“I think customers will benefit with ThoughtSpot as a public company, but we’re not in a hurry to make that happen,” ThoughtSpot CEO Sudheesh Nair told Insider. “We are a well-funded company with good momentum behind us. With this kind of momentum, we definitely have a path open for an IPO. It is on us to figure out the right time to take it.”

The firm has three goals it wants to tackle before reaching that landmark:

It wants to cross, $100 million in annual recurring revenue, achieve 40% to 50% year-over-year growth, and move 100% of its business to cloud software subscriptions.  

“I believe those three things are the key things,” said Nair, who previously took Nutanix public in 2016. “When we hit those metrics, the company will be ready.”

ThoughtSpot plans to move 100% of its business to the cloud

For the first five and a half years of its business, ThoughtSpot’s software was completely based on on-premise data centers, running on top of software like Oracle, SAP, and Teradata. Last year, it began making the move to the cloud in earnest to allow it to on-board customers faster and allow them to be more agile in scaling the service up or down depending on their needs.

This past quarter was ThoughtSpot’s first of running on cloud.

It has moved 21% of its business already, and 92% of its new customers purchased cloud products. Its goal is to move 80% of its business to cloud by the end of this year. By next year, it plans to hit 100%.

With on-premise software, Niar says it’s common for sales cycles to be long, taking six months to get a customer up and running. Now, ThoughtSpot has shrunk its sales cycle and simplified its cloud product, allowing customers to get started in 30 minutes. 

“To do that, it’s a lot of work,” Nair said. “It’s one thing to start on cloud. It’s much harder to do that as a transforming company. We have aggressive goals.”

ThoughtSpot started making this change last year. But during this transition, the coronavirus pandemic swung into full force and it laid off about 10% of its workers.

“We had to face COVID and transform the company while being distributed at home,” Nair said.

The company learned, through the process, the importance of clear communication, which it has had to put to use during its shift to the cloud, as it has communicated why customers will benefit from it and how employees should adapt. 

“It’s not enough to tell people what we are doing,” Nair said. “It’s more important to tell people why we’re doing and what their role will be.”

How ThoughtSpot and Snowflake banded together

ThoughtSpot and Snowflake first announced a partnership in 2019, in part because they had many overlapping customers including Capital One and Hulu.

ThoughtSpot helps customers report their data, make predictions, and understand what actions to take to make those predictions come true. Meanwhile, Snowflake — which had a record-breaking IPO last September — builds data warehousing products. Customers reached out to ThoughtSpot and said that they would love for the two products to work together better, Nair said.

Their latest agreement centers on helping customers benefit from Snowflake’s pricing model, which is based on the resources they consume. Consumption can be hard to predict and customers won’t be happy if they’re paying for resources they’re not getting value for, Nair says.

“I think that’s the thing I love about our business,” Nair said. “You can hobknob and drink wine and build relationships with vendors, but ultimately customers decide.”

Got a tip? Contact this reporter via email at rmchan@insider.com, Signal at 646.376.6106, Telegram at @rosaliechan, or Twitter DM at @rosaliechan17. (PR pitches by email only, please.) Other types of secure messaging available upon request.

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