Why Redpoint invested in Snowflake in early 2014
By Satish Dharmaraj
Congratulations Team Snowflake! On the occasion of its most recent funding announcement and $12.4 billion valuation, we wanted to pan back to when we first met the Snowflake team, when it was pre-revenue and pre-product. Back then, our expectations were high, but the Snowflake team has outmatched even our wildest expectations, with its incredible execution and strategic savvy. The kind of revenue growth that Snowflake is putting up is unprecedented — we have never before seen it in our history, nor in our examination of the fastest-growing public companies in the enterprise sector!
As a throwback to when we did the deal, we pulled the deal memo we wrote and looked back at the balance sheet we had for the company at the time. It’s always great to look back at the journey and think about the time when Snowflake was just getting started, as a glimpse into what we saw and why we decided to do the deal in the first place. Here are some excerpts from our deal memo and a conclusion!
Excerpt from Deal Memo—March 2, 2014:
Reasons to be interested:
Very strong team with highly relevant domain expertise. Team is the #1 reason to do this deal
Huge multi-billion dollar market
Very high technical barrier to entry and unique IP
AMZN Redshift is going to offer significant competition
Pre-revenue and pre-product company (product in alpha) in what will be a super competitive market
Price is super high relative to stage ($60M pre) and even at this level there is significant competition from our peers
Our partnership voted to do the deal after much discussion. It wasn’t a controversial vote, but it’s such a good throwback to think that $60M pre was a barrier back in the day. Why did we do this deal despite the huge price (relative to those days) and the significant risks involved from an incumbent AMZN? It was a 100 percent bet on the people and the team more than anything else, and the belief that they will build something faster, more scalable and easier to use than the incumbent. Benoit, Thierry, and Marcin were — and are — special.
“It was a 100 percent bet on the people and the team more than anything else, and the belief that they will build something faster, more scalable and easier to use than the incumbent. Benoit, Thierry, and Marcin were — and are — special.”
And when we met them we knew it. Spending time with them made it clear to us that we had to back them. Below are some references on the architecture they had built and what we heard about the founders; this helped seal the deal for us to bet on this pre-product company. This team was going to do special things and we could feel it. I’m thrilled we didn’t talk ourselves out of this one based on incumbent competition. It’s also exciting to see the amazing progress and this huge milestone for a seminal company. So many more great milestones to come.
A few references from the Deal Memo — March 2, 2014: