“Don’t Go Nuts With This”: Tech CEOs on What $100M Can Buy

Xconomy Boston — 

So, your long-scrappy tech startup cashed a nine-figure check from a gaggle of venture capital types.

What now?

Launch a hiring spree? Land a beachhead in Europe? Squirrel some away for a rainy day? Build all the features into your gizmo that you always wanted (and promised to customers)?

By our count, at least 14 Boston-area technology companies have hauled in funding rounds of $100 million or more in 2018. The list: Actifio, American Well, Circle, DataRobot, Devoted Health, ezCater, Flywire, Fuze, Hopper, Iora Health, Scout Exchange, Starry, Toast, and XebiaLabs.

So, what does $100 million buy you these days? An army of developers, perhaps, plenty of glitzy office space in downtown Boston, 17,271,157 Big Macs, or 1,125 Range Rovers. (Those last two are calculated before taxes.)

Xconomy called up four CEOs and founders of the Boston companies to hear their rich plans for the future. For many, the investments are late-stage and are aimed at pushing into new markets, gobbling up new customers before other companies catch up, and engineering some second act to keep the customers they have. Some can see black ink in near-term financial statements, or at least some narrowly defined profitability measure that points their investors to a bright future.

All seem to have a clear strategy—and some are more conservative than others.

“We had to walk around the company saying, ‘Don’t go nuts with this. All $100 million are earmarked’,” says ezCater co-founder and chief executive Stefania Mallett. “It remains a delight to have it in the bank account.”


Two weeks ago, machine-learning platform startup DataRobot closed a $100 million Series D investment round. The infusion is meant to maintain the Boston company’s lead on competitors as they just now jump into the automated machine-learning sector, according to CEO Jeremy Achin.

“People started chasing,” he says.

DataRobot plans to spend to get more customers—and part of that means breaking into new markets like South Korea, Brazil, Germany, and Australia, Achin says. For its product, which automates data science work and makes managing predictive models easier for businesses, the funds will go into developing DataRobot’s innovative “second act.” That will mean spending on developers and possibly more acquisitions “to complete this puzzle in my mind,” Achin says, referring to the company’s long-term plan.

“You can’t just sell what’s on the truck,” he says. “There’s so much VC money, especially in this space. If you think you can build something and see that for the next 10 years and maintain it and make incremental improvements—there’s no way. Everyone is trying to disrupt everyone.”

“We need to go faster,” Achin adds. “What we are sure about is spending on the higher side. Missing that way is a lot safer than spending not enough, given where we are in the market. The worst thing is to take it easy and competitors start to catch up.”

DataRobot’s game plan is more offense, and Achin says he’s open to taking more capital if it’s needed. Achin did not reveal any of the company’s finances, but adds the company is close to 500 employees and expects 2018 to be its fourth year in a row of triple-digit revenue growth. He says when the company took its last funding round, $67 million in 2017, he mapped out a plan to reach profitability by mid-2019, and DataRobot’s financials are currently ahead of that schedule.

“We’ve had acquisition offers,” Achin says. “This was never about building something and selling it and making some money. We always wanted to build something big. … If we IPO at $1.5 billion market cap, we won’t think that’s a success. We want to build something bigger, and that takes capital.”


The roadmap has always been there for Mallett’s business catering startup, from ezCater’s seed round to the $100 million Series D.

“It started a pattern where we don’t raise money unless we know what we are going to do with it,” she says.

And this time around?

“The money came four-and-a-half months ago, and all’s going according to plan.”

By the end of 2018, the company expects to have grown by 350 people, to 500 in all. It bought Paris-based GoCater this year for an undisclosed sum. EzCater is moving into new digs in Boston, leased from WeWork, that will accommodate 750. The company is investing in new ways to get customers into its platform and more tools for restaurants to manage business catering orders—whether they are incoming through ezCater’s online system or not, Mallett says.

“We need to hire more programmers,” she says. “We are made by smart decisions and very clever tools.”

Mallett says ezCater is profitable if you take out acquisition costs from earnings before interest, taxes, and amortization.

Mallett says the company continues to double its revenue every year. “We think it would be 30 percent to 40 percent growth without big investments. We could operate at cash break-even and be able to function forever.”

EzCater is looking at raising more money in the next two years, looking to acquire other businesses. Beyond that, the time could be ripe for a public stock offering, Mallett says.

Iora Health

Rushika Fernandopulle, a medical doctor by training, has no issues asking for more money when his goal is transforming the multi-trillion dollar healthcare market. In May, his company Iora Health, whose slogan reads “restoring humanity to healthcare,” closed a $100 million Series E round.

“It is obviously a lot of money,” says Fernandopulle, Iora’s CEO. “We are trying to do something really ambitious, transform a sector of the economy that is $3.5 trillion at the moment in the U.S. alone.”

Iora’s push to a collaborative care model for primary care—involving nurses, doctors, and health coaches all stitched together with the company’s technology—also aims to upturn the traditional fee-for-service model. Instead, with Iora, employers and insurers pay a flat fee for employees to get care.

To take on the status quo in healthcare, he’s found you need to throw out much of the current healthcare infrastructure and start from scratch. “The tech platforms out there are built, not surprising, for the old system,” Fernandopulle says. “We have no interest in that.”

Iora has primary care sites in eight markets, and just added 10 new practices in the past few weeks. But the growth is a slog. Unlike Starbucks, say, health care is local, Fernandopulle says.

“I wish it was that easy. Coffee is coffee, and you can largely give the same coffee in Seattle and Phoenix,” he says.

Iora’s funds will be plowed into refining its technology, growing in existing markets, and breaking into new geographies. Planting a flag in a new area is made difficult by the differences between each state’s healthcare regulations.

“There are a bunch of barriers,” Fernandopulle says, noting his investors are on board with the company’s longer time frame.

“We are 8 years old. We are doing great,” he says. “This is not a sort of 18-month tech startup, flip to Google sort of thing. It’s a long play. We need investors who are with that program.”


When the $100 million investment is your company’s second nine-figure funding round, some of the magic can be lost.

“It’s another Thursday. We don’t even think about it to be honest,” Toast co-founder and president Aman Narang says.

In July, the restaurant technology company raised $115 million in a venture round it says pushes its valuation to $1.4 billion “unicorn” status. A year prior, Toast was served up $101 million from investors.

“There’s so much work to do, frankly, the fundraising round is just one more day,” Narang says.

Toast is going after the 700,000 or so restaurants across the U.S., many that still use outdated restaurant payment or ordering tech. The most recent funding is aimed at achieving scale, Narang says, including product improvements, customer support, and market expansions.

The company had 1,000 employees as of this summer and expects to double that number in the next 18 months.

Narang declines to give a financial picture of the company. Toast is growing, he says, and the company is investing ahead. He says its operations in major markets, like Boston and elsewhere, are profitable.

“We are still in the early innings,” Narang says, “and at the beginning of what we can do.”