Data Management Startup Segment Now Has a $1.5 Billion Valuation

Segment, a startup that helps companies manage the streams of data they collect about their customers, raised $175 million in venture funding, according to Bloomberg.

Existing investors Accel and Alphabet’s GV co-led the round with a new stakeholder, Meritech Capital Partners. The funding valued the company at $1.5 billion, according to a person familiar with the matter who asked not to be identified. Other returning investors include the Y Combinator Continuity Fund and Thrive Capital.

Segment helps companies provide better support and service by combining together all the different ways a company might collect data on a customer. For example, Glossier uses 14 different analytics tools across 12 different platforms such as their website, their mobile app and their brick-and-mortar store, said Segment CEO Peter Reinhardt. “Each tool has its own copy of the customer data and history of privacy preferences,“ he said. “You can imagine the sort of complexity Glossier has to deal with.“

It may be easy now for investors to see a path forward for Segment, but the founding team struggled for a year and a half to get off the ground. They originally went through Y Combinator’s incubator program in 2011 with a product that aimed to let students in college lectures alert professors when they were confused.

It was a flop, partly because students took out their laptops to use the tool but all ended up using Facebook instead. The team then tried building an analytics tool before realizing the plumbing they built to connect those tools to each other would be more valuable. Segment launched its new product in 2013, and the company plans to use this new funding to hire more workers internationally.