After $100m fundraise, SG-headquartered Near on the prowl for acquisitions in US

Near founder and CEO Anil Mathews

Fresh after raising its $100-million Series D round last month, Singapore-headquartered artificial intelligence (AI) startup Near is on the hunt for acquisitions in the US.

Founded in 2012, Near collects, manages and analyses location, enterprise and consumer data to provide actionable insights to its customers that include News Corp, MetLife, MasterCard and WeWork. It claims to process data from over 1.6 billion monthly users across 44 countries. Its key markets are in the Asia Pacific across Japan, Southeast Asia, Australia and New Zealand, with Australia being its largest market by revenue.

Near CEO and founder Anil Mathews believes the company is ready for a larger international play. In an interview with DealStreetAsia, he said the firm is actively scouting for suitable targets to penetrate the US market, one of the largest and most competitive SaaS markets in the world. 

Mathews listed US-based company Factual as one of its competitors, but said that he is not seeking to buy it out. 

“We are looking at US companies to acquire as we speak…We are looking at someone who can complement and sell our current product. It could be a competitor. But we haven’t zeroed in on anyone on the list that are competitors as well,” said Mathews.

Mathews added that Near was already EBITDA positive before closing its $100 million Series D round by London-based private equity firm Greater Pacific Capital. A “small portion” will be used to finance its overseas acquisitions, while the rest will be dedicated to acquiring, storing and analysing data in its existing markets. 

Near declined to disclose revenue or valuation figures. However, it is growing by 100 per cent year-on-year. Mathews also expects an exit within the next two to three years but did not share whether he foresees this exit being in the form of an IPO or a trade sale. 

While Greater Pacific Capital is Near’s largest shareholder, it does not hold a majority stake in the company. Other investors on its cap table are Cisco Investments, Telstra Ventures, Sequoia Capital India, JP Morgan Partners, Global Brain Corporation, Canaan Partners and OurCrowd. 

Edited excerpts of an interview with Near founder and CEO Anil Mathews: 

What is Near and what do you do? 

On a very high level, we are a data platform. There are three things that we continuously do. First, we need to constantly look at acquiring new kinds of data sets that we can bring into the platform. This requires investment. Today we have transaction data, weather data, traffic data, events data…etc. and we work at bringing all these things together. That’s one of the things we’ve solved really well – bringing in multiple data sets to a single platform to understand people’s behaviour in the real world. You can treat us as this alternate data platform, which is built on physical world attributes. So there’s a dedicated team, one of them is in Singapore, the another is in the Valley, sitting and looking at acquiring new data. 

Second, we need to store and process this data right away, so speed is of the essence here. There’s a lot of investment required and storing and processing the data. Third, is making sense of all this, which involves the use of artificial intelligence (AI) and machine learning (ML). So we are investing in hiring people who can make a lot more sense of the data that we bring in. 

Where do you get your data from? And how do you merge your physical world data with enterprise data offered from your clients? 

Our single identifier is the mobile device, which is hashed and kept in our systems. So we don’t store any personal identifiable information (PII). No first name, last name, email address, phone number, nothing. 

In the digital world, there are single identifiers, which could be a cookie ID, a game device ID or any ID that is created by third party software which they have installed. 

We need to take that news connector and connect it with our single ID, and then we can connect these two ideas. Once we connect, we can actually start adding attributes that this ID was seen in a Starbucks, and probably lives here because this is where he’s seen at night, this is where they go for groceries. We can start passing all this to their single ID and then now they can start populating that in the dashboard.

We get all this data because we’re connected telcos, Wi-Fi providers, and hundreds of thousands of apps, which are constantly giving us this data. 

We store everything in a way that cannot be reverse-engineered to which device it belongs. So it is one of the reasons we were able to win so far is because of how we tackle privacy. Large enterprises care about privacy so we need to be very mindful of how we can work with enterprises in a privacy-friendly environment. 

But does this make it a problem for the enterprise that they know all these things? 

I think it’s up to them to figure out how they want to monetize it. So a lot of other data sources, including transactions, they already have in their systems. With Near’s data, they can use it, because now we can give them a holistic view of the physical world. 

What do you invest the most in?

A good portion of our investment at this stage is going into infrastructure. Even our infrastructure is custom built from scratch. We don’t use any cloud extensively at this stage, but we might in the next phase. Currently, our data is in bare-metal servers that we procure and then store. We are just setting up a data centre in Dublin now, which would allow us to process most of the data. 

Even players in the SaaS space are realising its cheaper to set up a data centre than to upload everything in the cloud. 

Yes, it is cheaper. I think we would want to have a hybrid approach at some stage.

There’s a wave of countries looking into regulations that require companies to build data centres on-ground. What is your take on this?  

The laws are evolving. And I think a lot of countries are waiting and watching what the US doing about it. It will be interesting to watch what happens after CCPA, which is the California law coming into effect in January 2020. As soon as that comes into effect, you will see a lot of other states following and some other countries following as well. We see Australia coming up, Because you know, they’ve been waiting for this. Japan as well. So these are the countries who would come up with stricter laws. 

Thanks to GDPR (General Data Protection Regulation), we had to have our European consumer data stored separately in Europe. 

How long will the latest round of funding take you? 

We are not burning much. We were already EBITDA positive before we closed the round. We do have an acquisition plan coming up, and we’re looking at acquiring a company in the US and maybe some other entities as well. We may not need a large round of funding unless we’re looking at a strategically different direction. 

In the future, secondary rounds will obviously happen, and investors will start to look at an exit. But we are growing more than hundred per cent year-on-year. It is also possible that we might find a suitable exit in the next two years to three years.

Will you use all of the $100 million for acquisitions? 

No. A very small portion will be used for the acquisition. Most of it will be invested in acquiring data, storing data, and going deeper into existing markets. We are very solid in Australia, New Zealand, Southeast Asia, Japan, but less so in Western Europe and the US. 

We decided that rather than growing organically in the US, which might take another 18 to 24 months, it is better to look at an inorganic growth and shorten that period. We are looking at US companies to acquire as we speak.

What kind of player would you acquire?

We are looking at someone can complement and sell our current product. It could be a competitor. But we haven’t zeroed in on anyone on the list that is a competitor as well. It’s going to be interesting. 

Who are your competitors in the US? 

Factual is one of the US companies. But it’s not one of the companies that we’re looking to buy at the moment. 

We have competitors on a local level, but no one has the global presence that we have. Most of our clients like MasterCard, WeWork and News Corp want to work with us is because of this – they can work with the teams from London, Japan and Singapore because we have data for all these countries. 

What about competitors in Europe? 

In Europe, a lot of companies shut down because of GDPR so it’s a very good time for us. We also want to be careful, because things happen. There’s Brexit happening. You saw recently that the currency is the lowest in a decade. 

So there’s a lot of uncertainty in Europe before we can actually double down. But we’re keeping our eyes open. I’m personally spending some time there in Europe because I think there is a good vacuum now which we want to address. 

When you talk about privacy-led design, what aspects of this did you build into the system? 

For example, we know people’s home locations because we can see the device at night time. We can gather other insights from this. For instance, because we know the home location, we can look at real estate prices and from there we can gauge your affluence level and so on.

We had to completely change the way we stored this because of privacy reasons. So we stored it in a block level, so all we know is that you used to live in this block instead of this home otherwise it would be an invasion of privacy. So we had to bring changes like this in every step. 

So GDPR was very easy for us last year. The compliance was what took longer because whenever a new regulation comes, it’s not immediately clear what’s possible and not possible, right? The GDPR compliance with one of our German clients took us almost six months. But ultimately, it was not as difficult as some other companies we’ve seen, which had to pull out of Europe. 

So your revenue stream is largely limited to licensing and working with clients? 

Yes, and the data usage on top. So basically we have a usage fee, a licensing fee, which would be about 20 per cent of the revenue that you generate. Once we have a customer, we grow as they grow. 

I think our worry is that there have been customers asking us – can you help us in the Philippines and other places? Opening in new geographies and countries is the rush for us – there seems to be more demand in countries that we’re not present in yet.

Where are you in terms of annual revenues?

We haven’t disclosed it yet. But we’re growing more than 100 per cent every year and I predict this will grow especially on the back of the product. So it’s pretty healthy. 

Did Greater Pacific Capital contribute the full $100 million in the last round? And if so, does it make them the largest shareholder in your company? 

They did the whole $100 million. It makes them the largest shareholder, yes. It’s still a minority stake though. Everybody is still a minority shareholder. 

What’s next for you?

We need to solidify our position in the US. There have been a number of articles which have featured us as one of those companies which are moving from east to west. A lot of software companies, enterprise software companies actually move from west to east. Companies usually prefer to set up in the US, which is the biggest and easiest market to start before expanding east. We are the other way around. 

It’s very interesting because we believe that capturing the East was the hardest part because of the cultural nuances here. Southeast Asia is not one country. We know that because we’ve been here and we struggled to crack Japan and other parts of the world, which is very challenging and interesting. The biggest milestone now is having a significant presence. Our largest market by revenue today is Australia and that’s going to change, with the US eventually becoming our largest market. 

Where does China sit in your expansion plans?

We want to but unfortunately, we’re not there yet. It’s been on our radar, but we don’t have a solid plan yet. We will not enter China without the right partner. So we will need a very strong partner to enter. Australia is our biggest customer because we have Telstra with us. In Japan, we have Global Brain. Unless we find a strong partner that we can go with, we won’t enter the market because we know it’s not easy. 

Most people say that talent is the biggest constraint in terms of where you want to hire. You are small – where are your people based out of? 

The reason we remain lean is that we build stars in every position. Everybody in our organization is sort of a star of their own fruition. From a tech perspective, we have two offices – in Bangalore and in the Valley. Our CTO is a Valley veteran, with 25 years in Silicon Valley and has a robotics PhD from Carnegie Mellon. He is our AI guy. Our VP of data science was working in Amex in New York for 14 years. Our head of engineering came from Apple.

So a lot of them have had exposure to technology in the US because it wasn’t easy to find them in India. They come and mentor data scientists locally. Our team has been bringing people back from Silicon Valley to either Bangalore or if they can’t, they work directly. 

But where is Asia in terms of AI talent? Everyone talks about the US and China but if you’re operating in Asian countries, where can you find them? 

It’s difficult. If I had to find equivalent talent here in Singapore, I would be struggling. The Singapore government gives grants but it’s not easy to find really amazing people, especially when it comes to data. Everybody calls themselves a data scientist today. 

How much data does your company manage and acquire? 

In terms of the scale of data, we get 10 terabytes of new data every day. Today, we have 1.6 billion monthly active users across 44 countries. And we are looking at the behaviours of people across 17 million places. So it’s a massive system that is constantly looking at moments of people, and where the screens are coming. 

Currently, we are also doing predictive analysis – forecasting where a certain set of users will be tomorrow, based on the previous historical behaviour, and we are able to do that with good accuracy.

Do you see any opportunity in blockchain, especially with security being an important factor for you? 

Yes, we are doing some experiments with blockchain as well. But it’s very early days. I think as a company, we need to be on our toes with what is coming up and new and whether to use it to some extent in our offerings. 

You have a SaaS model. What are your rates like?

So basically, the average ticket size is $245,000. So we’re on the higher end of the spectrum. We’re not like $10,000 or $20,000 like other players.

What is the renewal rate like? 

A lot of this is very deeply integrated to the user. For example, with NewsCorp, we power 40 per cent of their insights, which means it’s like a tap. If we switch off, their product will also switch off. As a result of that, the churn rate is very low. 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.