Samsung, Google Back Tamr as Big Data Startups Try to Find Their Way

[Updated 7/11/18, 12:01 pm. See below.] Businesses have sunk a lot of money into software tools to analyze the reams of data they’re generating, in search of insights that might help them increase sales or cut costs.

But analytics tools don’t work effectively unless the data can be easily retrieved from a company’s disparate systems and storage locations, and the information is cleaned up (think paring down redundant data, fixing typos, and putting data in the right format). That predicament has led to a wave of startups peddling software for data “scrubbing,” “wrangling,” “curation,” “unification,” and other buzzwords that boil down to helping businesses manage and prepare data for analysis.

Andy Palmer, CEO and co-founder of one of those startups, Tamr, thinks the market for such products is maturing. Today, his Cambridge, MA-based company announced it raised $18 million in new venture funding to try and grab a bigger piece of the pie.

“This problem of preparing data broadly in the enterprise has become a thing,” Palmer (pictured above) says. “One of the reasons is people tried to do more aggressive A.I. projects, [and] many of them have realized that the quality of their data sucks and they need to fix it.”

Still, it can be difficult for startups like Tamr, which has 85 employees and has raised about $65 million in venture capital to date, to convince large corporations to adopt their tools. Palmer says many of them use data-preparation products and related offerings from older “single-platform data vendors” like Teradata (NYSE: TDC), Oracle (NYSE: ORCL), and IBM (NYSE: IBM). But he argues that businesses would be better off switching to a mix of data management and preparation tools from newer companies like Tamr, Trifacta, Waterline Data, Alation, and Alteryx.

“Our biggest challenge with most of our customers is getting them to understand that doing a best-of-breed, open implementation is more effective and cheaper than selling your soul to Teradata,” Palmer says. “There’s dozens of these young vendors now, Tamr being one, that are kind of figuring out their place in the world.”

Some of them seem to be picking up momentum. Alteryx (NYSE: AYX) has seen its stock price more than double since it went public last year, and the Irvine, CA-based company is now valued at more than $2.4 billion. San Francisco-based Trifacta raised $48 million in funding in January, bringing its venture capital haul to $124 million. Redwood City, CA-based Alation pulled in a $23 million Series B funding round a year ago.

Palmer founded Tamr five years ago with Michael Stonebraker, the MIT professor, database systems pioneer, and A.M. Turing Award winner. Palmer and Stonebraker previously founded Vertica Systems, which was initially led by Palmer and eventually sold to Hewlett-Packard. (Interestingly, Vertica’s second CEO, Chris Lynch, recently returned to the corner office as chief executive of AtScale, a data management software company based in California.)

Tamr’s software uses a combination of machine-learning algorithms, statistical analysis, and human experts to integrate a company’s scattered data streams, so that customers can more effectively apply analytics and visualization tools developed by other software companies.

Tamr has more than 50 customers, Palmer says. Most of them are large, global corporations such as General Electric (NYSE: GE), Toyota (NYSE: TM), GlaxoSmithKline (NYSE: GSK), and Samsung. Samsung Ventures is one of Tamr’s new investors in its latest funding round, as well as SBI Investment, INTAGE Open Innovation Fund, Fenox Venture Capital, and Alumni Ventures Group. Previous Tamr investors also contributed to the round, including New Enterprise Associates and GV, the venture arm of Google, according to a press release. Tamr’s past backers include GE Ventures.

Palmer declined to disclose Tamr’s revenues, but he says the company projects it will double its sales this year. “The next big milestone for us is [to get] cash-flow positive and profitable,” he says. “We think that’s probably within the next couple of years.”

It’s just speculation on our part, but if Tamr achieves those goals, it would likely have plenty of acquisition interest from its corporate investors. For his part, though, Palmer says he’s in it for the long haul with Tamr. He has also been an active investor in young companies over the past decade, although last year he said he would stop investing directly in startups, at least for the foreseeable future, and would instead invest in early-stage venture firms like Founder Collective. But he wants to go the distance with Tamr, which he says will likely be the last startup he runs. [Updated with comment about Tamr being his last startup CEO job.—Eds]

“If it takes a long time to build a big, independent, profitable software company, I like that idea,” Palmer says of Tamr. “I’m not going anywhere.”

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