Factual, a Los Angeles-based developer of a massive open data platform, just announced that it has raised $25 million in Series A funding. The company was launched by Gil Elbaz, whose previous effort got scooped up by Google and eventually became the basis for AdSense.
Here’s how it works: Factual allows the crowd to upload data sets on virtually any topic into its system, and also allows users to correct existing records. For example, here is annual revenue and profit figures of Fortune 500/1000 companies for the past 53 years.
Think of it as a Wikipedia for structured data, with paying customers able to merge data sets and insert them into customized applications.
Andreessen Horowitz and Index Ventures co-led the round, with Ben Horowitz and Danny Rimer taking board seats. So I spent some time on the phone with Horowitz, to get some thoughts about the company:
Fortune: You first invested back in February, as part of Factual’s seed round. What big question did the company answer since then, to convince you to co-lead this Series A deal?
Horowitz: When we first invested there were two things that drove our decision. One was Gil, a legendarily smart guy who built Applied Semantics and who has a profound effect on the industry.
Then there was the idea itself, which was very, very big. As software has changed and gotten way more sophisticated, a lot of the technology has shifted to the data. So the time had come to have a data platform that is more of a software platform.
The issue, though, was that while the idea was great, it was also very abstract. It was unclear that he’d be able to get traction because most people couldn’t even understand what we was talking about.
What’s been super-shocking is how many customers he’s been able to get on the platform and how diverse they’ve been. It’s changed our thinking a lot about the market, in that it seems to be ahead of the literature and conventional views on where things are at.
Was part of your original thinking about the market that Factual would need to zero in on a few verticals, rather than all data on everything?
Yes. We weren’t sure how many interesting data sets there really were, and how many could be incorporated into this type of platform. What’s really frightening is that interest has come from general interest groups like Newsweek, and then giant Internet companies with lots of technical acumen.
The hard thing has been getting all that data, cleaning it, normalizing it and making sure it’s up to date. That’s very difficult to do correctly, particularly if you’re crowd-sourcing data. It’s cheap, but complicated.
Anyone can sign up for a free account. What do paying customers receive that the rest of us don’t?
The biggest thing is performance and how many calls you can make. So if you’re putting the data into a product, like what college did people go to and presenting that as a location-based app – than you’ll want access to make as many calls as you want.
Your firm and Index both participated in the company’s seed round. Did you have some sort of option on the Series A?
There was no option in either direction. Not “if you hit milestones we’ll give you more money,” nor “this is the hottest deal out there, so we’ll give you first access.” Our investing philosophy on seed deals is that we act like angels, and if you like us through that process – and we liked you — we hope you’ll let us participate in a venture round. It lets us be more experimental.
So this was competitive, with term sheets from others firms?
What would you see in terms of future financing needs?
It’s a little hard to say because we’re so early on in it. There’s a real kind of network effect, where the more data gets you more customers and the more customers gets you more data. So they’re still figuring out how much money to deploy and how fast. If it works, there will be at least one more round.