Auckland startup PredictHQ raises $15m after big Uber win

Celebrating a $15m injection (L-R_: PredictHQ chief product officer Yen Lim, co-founder and CEO Campbell Brown and co-founder and CTO Robert Kern. Photo / Supplied.

Auckland software startup PredictHQ has raised US$10 million ($15m) in a Series A funding round after signing marquee early customers including Uber, Domino's and Booking.com.

Chief executive Campbell Brown told the Herald that three years ago he was running Online Republic, a site that offered online car and camper van rentals and cruise ship bookings.

A key problem for the Online Republic team was they had difficulty predicting demand. They were constantly caught out by public events or, more particularly, when several public events happened at once, especially around holidays.

Brown was amazed to discover that while there were lots of forecasting tools that mined historic data, there was no global player who aggregated all public events in one, easy to access service.

He sensed a business opportunity. Online Republic was flicked off to Webjet (for a tidy $85m), and Brown co-founded PredictHQ with fellow Online Republic alumni Robert Kern and Mike Ballantyne.

Brown was the boss, Kern the tech brain and Ballantyne, who owned the most shares and made easily the largest profit from the Online Republic sale, albeit with a lot of it tied up in Webjet shares, the founding director.

Brown said he soon discovered that to get a foot in the door with Silicon Valley investors and customers, and recruit key staff, he would have to relocate to the tech capital.

"If you say you have to jump on a plane back to New Zealand, they just don't take you seriously," he says.

So while PredictHQ's core team remained in Auckland, Brown, his wife and two young kids (now three) relocated to San Francisco.

It was something of a leap of faith. Brown had a solid track record in NZ, but in the US he was chopped liver. With no credit record, he found he couldn't even buy a cellphone on tick.

What he could do was get a toe in the door at Uber, and was able to help it out with a problem.

Uber had a mechanism for dealing with demand as it happened, as anyone who has paid surge pricing can attest, but it was struggling with an inhouse attempt at forecasting.

Campbell Brown (centre) with Silicion Valley VC Theresia Gouw and Rampersand co-founder Jim Cassidy. Gouw says she's looking for more NZ investments. Photo / Supplied.

The ride-sharing giant signed up with PredictHQ around a year ago. Brown won't give any financial details of the deal. But he said it's "substantial business" rather than Uber doing a little experimentation on the side. The ride-sharing company has built tools on top of PredictHQ's API (application programming interface, for software to talk to other software), incorporating its service into its core systems.

And the blunt fact that PredictHQ has just been able to raise US$10m - on top of an earlier US$2m seed round - indicates it is doing some meaningful business, with more in the pipeline.

"It was an amazing start for us to get someone like Uber," Brown said.

PredictHQ's software costs from $250 to $2500 a month for small to medium businesses depending on the number of event alerts they receive, with custom pricing for larger customers. Image / Supplied.

The new money will be used, in part, to hire more staff. PredictHQ's Auckland contingent - who are about to move into a new office at Britomart - will increase from 22 to around 60 over the next year, while the company's US staff will increase from three to around 20.

Brown says he's shooting for $100m annual revenue in the medium term. His longer term target is $1b.

Today, PredictHQ alerts its customers to around 20 million events in 30,000 cities that could cause fluctuations in demand for their products or services, including concerts, sports, conferences, performances, and public holidays.

It also lets customers know about events that will suppress demand, from looming severe weather to lingering disruption caused by terrorist attacks to the screening date of the first episode of the final series of Game of Thrones.

It tries to differentiate alerts. A farmers' market that could attract a few hundred people to a suburb on a Saturday morning will be of interest to local Uber drivers but not airlines, for example.

And PredictHQ serves its data in a format that's readily digestible by its customers' AI machine learning systems.

Domino's is using it to help predict how much ingredients to stock at particular locations and hotels affiliated with Booking.com are using it to help optimise pricing.

Brown says it has no direct competitor, but various large companies are still trying to develop inhouse forecasting tools.

The $10m Series A round led by Silicon Valley-based Aspect Ventures with participation from Lightspeed Venture Partners (known for its early investments in Snapchat and Nest) and returning investors Australian-based Rampersand VC, Addventure and Tony Faure (who chairs PredictHQ's board; his other directorships include chairman of oOh! Media).

The Series A round also saw Aspect Ventures co-founder Theresia Gouw join PredictHQ's board. Gouw was a partner at top-tier Silicon Valley venture capital outfit Accel before she struck out on her own to found Aspect.

"PredictHQ is a unique data platform whose customers include leading companies in target markets, such as Uber, Booking.com, and Domino's" Gouw says.

"We were also impressed with Campbell and the team and believe in what they are building."

More of Gouw's cash could be heading down under.

"We are open to investing in more New Zealand companies," she says.

"There is a strong presence of tech talent in the area and our objective at Aspect is to invest in teams and companies who are disrupting how the world communicates and interacts across borders."

Brown declined to give a post-money valuation.

A Companies Office update dated October 31 records Brown as the largest shareholder with an 18 per cent stake followed by co-founder Ballantyne (15 per cent). Aspect has a 10 per cent stake, Lightspeed Venture Partners 8 per cent, Rampersand 8 per cent and co-founder Kern 4 per cent.
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