Toronto-based startup Buf Technologies has 18 employees and no sales, raising more than 100 million US dollars – but big plans
Some of the top names in global venture capital have invested more than $ 100 million in a Toronto startup named after the city of Buffalo with 18 employees, no revenue, and big plans to transform software development.
Buf Technologies Inc. announced last week that it has raised $ 93.4 million in four separate financings since its inception 22 months ago, including a $ 68 million finish last month from the New York Fund Lux Capital and Tiger Global were jointly cited.
Other investors include US venture capital firms Amplify Partners, Lightspeed Venture Partners, Addition, Haystack Ventures, Abstraction Capital, Greenoaks Capital Partners, and Canada’s Garage Capital.
It is the fourth investment this fall in Canada led or co-led by Tiger Global, one of the world’s largest and most prolific early-stage investors, with board seats or other terms normally set by VC firms.
Buf’s early success in attracting money is in sharp contrast to Canada’s startup scene a decade ago, when many founders here were told by US funders that they would have to move south as a condition to get funding. Many did.
In contrast, Buf was founded and built in Toronto by American software engineer Peter Edge after quitting his previous job at Uber Technologies in the city, which has seen a tremendous influx of global tech giants and an increase in startups using the without having to move. “The team could have built this company anywhere,” said Mike McCauley, managing partner of Garage Capital, based in Waterloo, Ontario. “But they chose to build it in Toronto … because they believe that’s the best place to attract the best global talent.”
Mr. Edge called the company a nod to both its hometown of Buffalo (which is technically the company’s headquarters) and the area of software development it focuses on, known as protocol buffers (or ProtoBuf), which are open source Tools first developed by Google.
In plain language: Buf is working on making it easier for machines and software programs to communicate with one another. Developers typically create and use software tools known as application programming interfaces (APIs) that enable various digital technologies to interact. While some of the largest digital companies have adopted technology like ProtoBuf to streamline the development process, much of this work is done by everyone else using less advanced open source programming tools. It’s a tedious process that Mr. Edge said in an interview that he previously used up 20 percent of his time as an engineer.
“Neither of us really offers any business value in this,” said Mr. Edge. “A lot of people in the industry have had a really hard time making it easily accessible to everyone else, and we believe we have the experts around the world to actually make it happen. If we can eliminate a large portion of the code base that you have to write … it effectively reduces the time your engineers spend on all of these side tasks. When any business becomes a software company, you are giving back one of its most valuable assets to a company when you can give back time to develop software. “
The company’s head of business development, Ahron Seeman, a former management consultant, explains his approach of building “scheme-controlled” tools “analogous to Lego”. You know what the interface between two bricks will be, so you can build a chimney before you build a roof because you know exactly how to connect them. Google and Facebook have been doing this for years. Buf’s value is creating software that helps [other] Companies are doing this in a more accessible way. “
Mr. Edge, who studied computer science and math at Carnegie Mellon University in Pittsburgh, has recruited at least six of his former colleagues from ride-sharing giant Uber. Other buffers previously worked at well-known technology companies Stripe, GitHub, Cisco, and Autodesk.
Mr. McCauley said, “What fascinated us most about the story was that the team had experienced the exact problem they were trying to set up in some of the most respected engineering firms … and realized that what they were building would be useful to everyone else would. but nobody had built it for everyone else. “
Guru Chahal, a Silicon Valley partner of Lightspeed who led Buf’s $ 3.7 million seed round in September 2020, said when meeting the company it was “very clear that the The potential here is huge because there is a lot of pain “. Every software team in the world goes through these open source projects and makes them usable for the team. If you had solved that, you’d be paid for it. “
Buf released a free, open source program called Buf CLI last year, which is said to have been downloaded by more than a million developers. For the past few months, it has focused on developing its paid tool called Buf Schema Registry. Several early customers are now testing it; Mr. Seeman describes them as “large corporations, public corporations and household names” but does not reveal their identity.
“I expect we’ll be starting our first revenue very soon,” said Edge, though he added, “Meaningful revenue to the point where it has a huge impact on the business is not our main goal as a goal for 2022. “
For the time being, the focus is on hiring up to 100 employees in the next year, accelerating development and building up the user base.
While the thought of giving away a product for years is alien in many industries, it is common in the world of software tool development; other billionaire companies have employed similar strategies, including Lightspeed-backed Grafana Labs Inc. and publicly traded Confluent Inc., Elastic NV, and HashiCorp Inc.
“Our experience is that if you add value and add value to engineering teams, there is enough budget to pay for a version with more support and features,” said Chahal.
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