Distil Networks raises $21M to fend off the bots

Venture funding may be tight, but it's still happening. Distil bucks the trend and scoops up a Series C.

Distil Networks raises $21M to fend off the bots

We've been hearing all year about the calamitous state of venture funding. The decline in technology stocks, the revaluation of the "unicorns" and the general sense of unease about the economy (Trump, anyone?) has led to a tightening of the pure strings in venture capital land.

But while the purse-strings have certainly tightened, the fact remains that venture capital companies still have cash they need to invest. The funds who give money to the VCs to invest for them certainly don't want to hear that those funds are simply sitting in a bank account awaiting deployment.

And so deals are still happening—arguably a little more modestly, but happening nonetheless. A case in point is Distil Networks, which today is announcing Series C funding.

Distil is in the business of protecting organizations and individuals from bad bots. While Bots may be all the rage today, with every vendor under the sun introducing bot platforms to allow people to build cool automatic features, the rise of the bots has led to a corresponding crescendo in concerns about those who use bots for nefarious purposes—the competitors, hackers and fraudsters who use bots as the entry point to effect web scraping, account takeovers, competitive data mining, online fraud and downtime. 

Distil last picked up funding in June 2015, and this round of $21 million, which included participation from new investor Silicon Valley Bank and existing venture investors Bessemer Venture Partners, Foundry Group and TechStars, takes total funding to date to $65 million.

Since its last round, Distil has launched an API-specific security offering and has acquired ScrapeSentry to add real-time, proactive traffic analysis and reporting into its product line. On the all-important customer front, Distil claims to have secured over 100 enterprise customers and points to B&H Photo, Wayfair and Glassdoor as examples.

My POV

Any funding round in this climate should be congratulated, and Distil is no exception. I'm seeing a couple of interesting trends in the funding space that Distil demonstrates. First is the involvement of banks in funding rounds. Generally we're seeing a degree of debt-based funding from the banks that startups are using to replace the increasingly hard-to-get equity funding from VCs. The longer-term impacts of this bank funding are unknown. Typically the terms banks offer are more onerous and may cause ramifications at a later stage. But in a climate where money is tight, there is no avoiding the pain of hard terms, be they VC or bank.

The second trend on display here is an increasing cadence of early acquisitions of very young startups by slightly more mature companies. As the venture landscape tightens, a number of angel or Series A funded startups are running out of cash and having to seek an escape route. These companies are often looking to slightly larger companies to "acquire" them (and, generally, the terms are both harsh and equity based). This has a corresponding impact in helping to broaden both the product and engineering footprint of the acquiring company. In this way, I'm seeing startups with far broader product stories than before. The days of a finite point solution all the way through to Series C or D funding are gone, and the pressure is on to truly deliver a broad offering.

All interesting trends. For Distil, however, there is some more cash in the tank, so it's back to the plan and a continuation of their early execution.

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