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Existing backers , , , and also put money in the round. The Toronto, Ontario-based company has now raised a total of just over $60 million since its 2014 inception, according to Crunchbase data. This latest financing is more than triple the amount raised in its , led by New York-based FirstMark, in December 2018, according to Crunchbase.

The company declined to disclose the valuation at which the Series B was raised.

Ada, a SaaS operator, has built an AI chatbot onto its ACX platform with the goal of helping companies such as , , and save money and improve customer satisfaction. It currently has more than 100 customers.

I hopped on the phone with CEO and co-founder to get a better understanding of what the company does.

“We’re on a mission to strengthen customer relationships through an incredibly easy-to-use automation platform,” he said. “Non-technical teams use a Lego-like block building experience to build a chatbot that automates upwards of 80 percent of all customer conversations.”

Ada can train its chatbot to understand and address topics specific to each business while getting up and running in weeks. A proprietary Natural Language Understanding engine helps the chatbot to understand meaning and context without perfectly constructed sentences, “allowing it to navigate around jargon, typos, spelling errors and more than 100 different languages,” according to the company.

The Ada advantage

The benefits of using Ada, Murchison said, include a dramatic reduction in customer service wait times. For example, one customer, AirAsia (with more than 100 million passengers) said the use of Ada cut down its wait time from one hour to less than 60 seconds.

It also increases customer satisfaction for an increase of 50 to 60 percent in rates in some cases, according to Murchison. Plus, it allows “a perfect memory of clients.”

“Whenever you talk to an Ada-powered bot, it always remembers who you are,” he told Crunchbase News. “And then it’s always improving based on the conversation you had.”

Additionally, it can automate the purchase of software for SaaS (software-as-a-service) companies.

“We’re turning what used to be a customer service cost center into a revenue generator,” Murchison said. “We’ve built an operating system for the customer experience.”

The company claims it helps automate over tens of millions conversations annually, and has: reduced customer wait time up to 98 percent; solved more than 70 percent of customer inquiries “instantly”; and achieved customer satisfaction scores of 90 percent.

Growth

While Ada is not yet profitable, it’s been seeing ARR (annual recurring revenue) growth. According to Murchison, ARR tripled in 2018 and 2019, and he expects it to triple again this year.

The company has 150 employees, 100 of whom were hired over the past year, and its new capital will go toward deepening the sophistication of Ada’s technology.

“We doubled our average automation rate last year, and we have a long roadmap of new ML features we’re going to accelerate the growth of with this new round,” Murchison told me. “We also want to expand our capabilities so we can support greater diversity and use cases, and types of customers.”

Ada also plans to use its new funds to “go more global.” Currently, 30 percent of its business is outside North America.

“I think it will be a lot more than that in the next couple of years,” Murchison said.

Investor POV

���������’s said his firm was impressed with the origin of Ada. The co-founders, Murchison and , actually created the product to solve a pain point around scaling customer support they were facing at another company.

“They pivoted the business to solve the problem,” Fletcher said. “And they have done it in such a way that gives customer service reps as well as business users and owners an opportunity to make their own tweaks–even if they are not technical. That not needing to have access to a development team is empowering.”

Accel invested in another Toronto-based SaaS company, , last year. In that case, Accel wrote its largest initial check ever, leading a $200 million round for the company in its first external funding in its 14-year history.

Blog Roll Illustration:

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A few things stood out to me about this round. For one, its investors. Austin-based and consulting giant put money in the round. McKinsey is not known for investing in startups, so this is a bit unusual. In fact, according to its Crunchbase profile, the firm has only previously invested in since it was founded in 1926. (Notably, three of those investments took place last year.)

As part of the funding, Praetorian has formed a partnership with McKinsey “to help clients solve complex cybersecurity challenges and secure innovation.” In a written statement, McKinsey said it selected Praetorian for investment “due to its client-first culture, strong brand reputation, organizational sophistication and technical talent density.”

Another notable thing about this round is that Praetorian is yet another example of a previously bootstrapped company that had achieved profitability and cash flow positive operations before taking external capital. Last year, Toronto’s made headlines for its $200 million Series A raise after 14 years of bootstrapping and profitability. That prompted me to talk to other founders of profitable startups who waited to take on external capital.

In its own words, Praetorian��provides a suite of security��solutions aimed at helping clients solve cybersecurity��problems across their enterprise��and product portfolios.

Praetorian declined to answer questions around the funding but we were able to glean some information around its growth metrics from its . The company, as of August 2019, reported year-over-year growth of 179 percent with revenue of $12.4 million. Customers – which range from the Fortune 1000 to venture-backed startups – include Zoom, Google, Microsoft, Samsung and WP Engine, among others.

Details

Praetorian Founder and CEO said he had “no intention of ever raising outside capital … having achieved profitability and cash flow positive operations through eight years of bootstrapping.”

But the company reconsidered after “being introduced to partners that brought value far beyond a capital injection.”

Kevin Buehler, senior partner and global leader of McKinsey’s cybersecurity practice, said the consulting firm was “deeply impressed with Praetorian’s distinctive capabilities in security architecture and engineering.”

Illustration:

News that had invested $200 million into the erstwhile-bootstrapped landed this week with a bang. The story was picked up by a , including Crunchbase News. We dug into the founding story of 1Password and peeked at the larger Canadian startup scene (the password-focused security company is based in Toronto).

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However, lost in nearly every story covering the round was the fact that the $200 million wasn’t all a primary investment into the company. Instead, a fraction of the money went to shares issued by the company while a large portion went to existing shareholders.

As :

At least one-third of the funds are going into the company and the balance to the founders, with the new investors getting a minority stake.

One-third of $200 million is between $66 and $67 million, still a huge check for a company that historically eschewed external capital. But the sum invested in the company itself is smaller than the headline figure would have you believe; the rest of the money effectively allowed existing shareholders to cash out a portion of their holdings.

Which, naturally, likely allows for a delayed liquidity event, such as an IPO.

Late-Stage Liquidity

Secondary sales allowing founders to cash out were once far more taboo than they are today; as companies stay private longer the pressure to keep founders and other executives has changed the narrative surrounding partial cash-outs of holdings before an often-delayed IPO.

While 1Password’s round does stick out a bit due to its utter lack of prior investment and reported consistent profitability, there are other examples of later-stage secondary sales that caught our memory this morning.

Let’s refresh our minds:

• : SoftBank became the company’s largest shareholder in a deal that involved SoftBank buying shares from existing shareholders and employees, according to .
• : CEO Travis VanderZanden sold some shares just one year in, according to
• : A little over two years ago, SoftBank invested $4.4 billion in WeWork, with $3 billion of that through primary and secondary shares, according to .
• : Qualtrics insiders cashed out $75 million in shares in the year preceding the company’s $8 billion sales, according to .

Startups are staying private now much longer than they had before. That’s in part because of the JOBS Act in 2012, which changed the point at which companies had to disclose certain information to the Securities and Exchange Commission, among other things. It made it easier for companies to raise more money and stay private longer.

Companies participating in liquidity efforts earlier in their lifecycle is a growing trend, according to a�� by , a platform that helps private companies with liquidity. The median age for a private company was 10 years for the past couple of years, but the “most common age range” for companies that came to the Nasdaq Private Market for liquidity solutions was six to seven years.

What triggers liquidity is a company not wanting to dilute itself too much, , Nasdaq Private Market’s head, told Crunchbase News recently. And once liquidity became more of a norm in the market, the cost of not addressing it earlier was employees leaving, Folkemer said.

So, we can infer from this whole situation that with there being so much capital in the market, investors want to put it to work, and are willing to buy secondary.

1Password stands out in this crowd, but more of it was secondary than we thought, and while that’s normal today, it’s not historically normal. The market has changed, that’s for sure.

Illustration:�� H/T