How MongoDB raised $150M in warp speed to challenge IBM, Oracle, and SAP

MongoDB, the company that offers a database technology developers can use to easily enter and retrieve data for applications, raised its $150 million round of funding in just three weeks, according to its CEO, Max Schireson.

Most fundraising takes months. However, Schireson, in an interview with VentureBeat, said the money came together quickly because of the significant opportunity his company’s investors see in the $20 billion market for so-called “operational databases.”

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“There’s been less evolution in this market,” he said of the operational database part of the database market where MongoDB plays, and which makes up about 70 percent of the total database market. “There’s greater need for change.”

VentureBeat reported earlier today on the funding, which values the company at a whopping $1.2 billion.

Operational databases are used by just about every company these days — at least by any company that offers or uses any application of some sort. These databases as the central place applications use to store and then retrieve information about anything, such as sales leads, media files, and personnel documents. Until recently, however, the operational database market has been relatively smug. For decades, companies like Oracle, IBM, and SAP have ruled the industry, offering a “relational” database technology that became standard.

But relational databases are rigidly defined, and their data must be filed in rows and columns. When a developer of a web app wants to make a change, it can take them an immense amount of work. So app developers began looking for databases that allowed changes to be made on the fly, with minimal hassle. That’s what MongoDB set out to offer when it launched in 2007.

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The company has since forged a leadership position among a host of companies offering new agile database technologies, which also include Cassandra, CouchDB, and Redis.

So after Schireson proposed to his board three weeks ago that he was going to raise another round of funding, offers from eager investors came quickly pouring in, he said. These came from both existing investors and new ones, like Salesforce, which is a big customer of MongoDB already, and companies like EMC and even SAP, which also offers a competing legacy relational database technology.

Indeed, Luis Robles, partner at Sequoia Capital (an early investor in MongoDB), said his firm was quick to offer more in this latest round. That’s partly because he sees many of the fast-growing portfolio companies of his firm adopting MongoDB’s product. It’s easy to learn and interfaces well with lightweight data-exchange formats like JSON, which developers use to create modern apps and let them talk with other apps. “Developers can get comfortable and productive with [MongoDB] very quickly,” Robles said.

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While relational databases are still important for some sorts of applications, such as financial transactions that can benefit from rigidity, Sequoia’s Robles said that up to 80 percent of applications being built today can get by with MongoDB technology.

MongoDB offers something called NoSQL technology, which enables companies to grab information in formats other than the neat columns and rows of a relational database. MongoDB is a so-called “documents-based” database, meaning it can accommodate unstructured or semistructured data. One early MongoDB customer was Shutterfly. In 2009, that company abandoned Oracle’s relational database technology, finding it too cumbersome. It found MongoDB a better fit for its photo-sharing business, where it requires speedy, persistent access to 18 billion photo for its seven million users.

One of the leading competitors to MongoDB is Cassandra, which has seen significant uptake by enterprise companies. One of the leading vendors commercializing Cassandra technology is DataStax, which has raised about $83.7 million in funding (see our separate story today about the competition there.)

Also, the operational database is a much larger market – about twice as big, in fact – as the market for so-called “analytics database” technologies, which enables people to do complex queries to gleam intelligence about what their data says about their business or operations. Hadoop technology is disrupting this part of the database market. Here, companies like Cloudera and Hortonworks are leading in the commercialization of the open-source Hadoop technology. They’re disrupting existing analytics database players, including HP, EMC, IBM, and Teradata.

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Hadoop is most often used for different processes than NoSql, and so customers can use MongoDB in tandem with say, Cloudera.

But the $150 million bet today on MongoDB suggests investors sees a greater opportunity in the operational database market for now: Mongo has now raised a total of $243 million, more than that raised by the two top vendors of Hadoop combined (Cloudera has raised $141 million, and Hortonworks has raised $75 million).

MongoDB will use the money to help it scale its offering. Oracle, IBM, and other leading database vendors have spent decades building out their technologies, and MongDB has to catch up quickly to fill out its offerings, Schireson said. Developers require a rich set of tools to work with their databases, including things like monitoring, backup, security, and orchestration features. MongoDB has been busy striking partnerships with companies offering such features to make sure its database interacts well with them. The company has partnered with companies like Informatica, QlikTech, IBM, Rackspace, Amazon, Redhat and Intel. “We’re going to be very aggressive about investing in R&D,” Schireson said.