Deal Radar 2009: Talend

Talend provides open source data integration software with data quality solutions that complement the data integration. Through the open source model, the company aims to make data integration available to all types of organizations regardless their size, level of expertise or budget, using the company’s flagship product, Talend Open Studio.

Talend, which has offices in North America, Europe and China, was founded in late 2005 by Bertrand Diard, CEO, and Fabrice Bonan, COO. Prior to Talend, Diard managed a business unit at a large systems integrator implementing a proprietary data integration solution. The founders realized that proprietary solutions came with several limitations for companies: they were expensive, required a lengthy learning curve and made clients dependent on the vendor. Diard and Bonan decided to enter the open spource arena to find a better solution. At this time, open source was gaining a lot of traction in the database, operating system and application server spaces. 

The company has raised three rounds of funding: a $4 million Series A round in May 2006, from which funds were used to develop the product and grow a community; a  $4 million Series B in May 2007 used to deploy business operations and generate revenue; and a $12 million Series C with Balderton Capital as lead investor, with existing investor AGF Private Equity, in January 2009.

When Talend was founded, the data integration market was dominated by proprietary vendors whose charges were in the range of $500,000. Many companies, even large ones, cannot afford these prices. A lot of the processes for operational data integration are developed manually and are expensive and difficult to maintain, making open source a viable alternative for IT departments.

Talend’s competitors in this arena are IBM and Informatica, both large, proprietary vendors. Talend has some advantages over both. Open source is less expensive than proprietary solutions, and the cost isn’t linked to data volumes or hardware power. In addition, support is charged by the number of developers using the tool.

A very strong differentiator is the vendor technology independence that open source provides, and the extensibility of the solution by the user. Informatica, which was the market leader, has acquired only 3,000 customers in 15 years as opposed to Talend, whose products have been downloaded 3.3 million times by over 200,000 active users in just over two years. 

There are several technical differentiators as well. Talend Open Studio is primarily used for integration between operational systems, as well as for ETL (Extract, Transform, Load) for business intelligence and data warehousing, and for migration. The learning curve is also much shorter, and users require around three days to reach proficiency. The implied continuity aspect is another advantage whereby open source guarantees usage rights under the same terms, whatever happens to Talend.

An IDC report indicates that globally, ETL represents a $2 billion market, and the operational data integration market is $11 billion. 65% of Talend’s market is small and medium business while Fortune 1000 companies make up the other 35%. 

Talend’s business model is based on services and subscriptions and is driven by interoperability. The company offers free downloads of its core product, Talend Open Studio, to attract users who eventually convert to paying customers with Talend Integration Suite, the enterprise version. The commercial open source model, an open core approach coupled with an enterprise version is the basis of their business strategy. Talend gained early traction from community buzz and free downloads.

The company, which is currently making revenue, said that it grew 500% in the last year and expects to grow 100-200% in the current year. It expects to be profitable over the next 12-18 months. Talend has over 700,000 core product downloads since the launch of Talend Open Studio in 2006 and 3.3 million total lifetime downloads. The company has 200,000 users around the world, and over 400 paying customers, including AOL, Levolor, SupplyFrame, eBay and Virgin Mobile. OEMs include companies like Jaspersoft and Sage. Over 100 partners are members of the Talend Alliance Program, including Unisys, Capgemini and Logica.

Talend plans to increase its quarter-on-quarter revenues by 50% or more, double the number of employees and continue its geographical expansion. It will plan an IPO when the market recovers.

Recommended Reading:
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This segment is a part in the series : Deal Radar 2009