We’re excited to announce that Elastic went public today at a $4.4 billion valuation. DCVC’s early investment in Elastic in its 2012 Series A financing built on our pioneering thesis at the inter­sec­tion of open-source, big data infra­struc­ture, and scale-out compute, which began with one of our founders seeding XenSource (the foundation of both AWS and Microsoft Azure) in 2004. We were drawn in by the Elastic team’s dedication to making big data accessible and actionable.

Validation of Open-Source Enterprise Model

At the time of our investment, it was not a foregone conclusion that an open-source enterprise model would be viable at the cutting edge of search. Elastic has put that uncertainty to rest. The company’s revenue grew by 81% in 2018, driven by their community-centric growth strategy, steady customer conversion, and 142% expansion of existing customer subscrip­tions. 32% of Fortune 500 companies now use Elastic to defeat hackers, monitor website performance, and provide search and analytics tools for their customers and employees.

Deep Tech Takes a Long Time

In the early 2000s, Elastic CEO Shay Bannon built a search engine to manage his wife’s burgeoning recipes from culinary school. Fast forward nearly 18 years, Elastic, the company he built around that search engine, now sports more than 350 million downloads and $159 million in revenue.

Two decades might as well be a century in the VC world, but deep tech requires both an investment of capital and an investment of time. Elastic’s careful construc­tion of their technology and their deliberate, relevant product development show how well-applied technical and market knowledge can build a company to scale.

We view this IPO as a promising signal for other companies from our early funds that solve heavy compu­ta­tional challenges, which have matured in recent years, as well. Real-time database MemSQL is seeing 200% year-over-year growth in commercial bookings and is replacing Oracle’s highest-end databases throughout a number of Fortune 2000 companies, and Postgres database Citus Data is expanding its database scaling services to the cloud, with marked customer success.

Congrat­u­la­tions to Shay and the whole at Elastic! It’s been a fun ride, and you’ve built a world-class company out of a (literal) cookbook.