Upstash announced a $1.9 million seed round almost exactly two years ago with the idea of building a serverless data platform for data-intensive applications built on Redis and Kafka. It doesn't seem like that long ago, but the data landscape has changed a lot since then.
Fast forward to today, and the company boasts $1 million in ARR and a $10 million Series A centered around the a16z and a shiny new vector database. What has changed in the short two years since he started the company is the growth of generative AI. As you may have noticed, this is a fairly data-intensive application.
Enes Akar, the company's founder and CEO, said his idea to create a pay-as-you-go pricing model, where you don't pay until your data starts moving through the system, was a big push for developers, especially those using Kafka or Redis for data. It states that it is attractive to developers who use it.
He says this pricing model reduces the risk of creating applications. “Consumer pricing is our biggest differentiator in the market because it removes the barrier for developers. As a developer, once I start a company, I'll have to wait until we get real traffic and get really popular. You don't have to pay anything,” Akar told TechCrunch.
This approach seems to be working well for the company, which has grown from 12,000 developers in March 2022 to 85,000 today. This kind of traction tends to get attention, and Akar said Andreessen Horowitz has actually approached him about raising money, something he doesn't hear much these days as investors' purse strings have tightened. It's a story.
Akar said he received an unsolicited email from a16z in June last year inviting a meeting, but was not seeking additional funds. In fact, he was more interested in remaining independent while building his business, but when it was suggested that we talk over Indian food in downtown Palo Alto, he decided to at least have a chat. I did. I wasn't kidding, he really wanted to talk. Try that restaurant anyway.
Over dinner, it came up that he didn't need to form a board to get this funding, and his desire to remain as independent as possible drew his attention to it. “I felt like it was too early. I still had money. I had some aggressive goals, like developing new products, but I told them I wasn't interested,” he said.
But by August, I saw generative AI really starting to take hold and had second thoughts. Akar, a native of Ankar, Turkey, was back on vacation when she called back to see if she was still interested in funding. It turned out that they were and began negotiations. The transaction was completed about a month later.
The new vector database plays a key role in supporting information retrieval in generative AI applications and is a direct response to the significant interest in this technology, specifically targeted at AI developers. “So, before Upstash Vector, we saw many developers using Upstash to develop AI applications along with the OpenAI API and Hugging Face API, and using Upstash Redis to cache and store data. “Now we're introducing Upstash Vector, which can be used just like Pine Cone or any other vector database,” he said.
The company currently has about 16 employees, many of whom are still based in Turkey, but recently hired his longtime friend Melek Peren Esin. His background includes an MBA from MIT, work at McKinsey, and sales management at Facebook. Position as COO. She handles the business side of the house while Akar handles the engineering. They are both based in Silicon Valley.
They plan to hire around 15 more employees over the next year to focus on professional support and customer success.