A UK-based open source startup is launching its first commercial product with the backing of one of Silicon Valley’s most prominent venture capital firms.
Pydantic on Monday launched its observation platform called Logfire five months after open beta testing and announced $12.5 million in Series A funding led by Sequoia.
However, the company is better known for its Python library and open-source data validation framework, launched by British developer Samuel Colvin in 2017. The project has become more and more advanced and is now used by developers at some companies around the world. The largest companies include Meta, Nvidia, Netflix, Google, and OpenAI.
The company deploys Pydantic within an application that needs to check the type of data entered by the user. If a form requires an email address and the user enters a phone number instead or leaves it blank, Pydantic checks this and delivers a user-friendly error message. It basically validates data structures to ensure their integrity and has a variety of use cases.
For example, ChatGPT maker OpenAI introduced structured output for its API in August, and this feature uses Pydantic internally. So, if your company wants to develop a chatbot that collects user details and returns them in a structured way so that the data can be easily processed in the system, you will use Pydantic.
“What’s interesting about Pydantic is that it’s the primary way to validate responses in LLMs,” Colvin told TechCrunch in an interview last week. “So if you want structured output, you can do that.”
Colvin launched Pydantic as a commercial entity in 2022, bringing it out of hiding 18 months ago by raising $4.7 million in seed funding from Sequoia. I think it’s time to start making money. In fact, Colvin said the company is effectively looking to “cash in on our credibility and brand name” by using Pydantic as a carrot for other products. , rather than building on Pydantic itself.
Tried and tested.
The typical trajectory for a startup building an open source business is as follows: We build open source products that solve real problems. The product catches the attention of developers and becomes an indispensable tool in their stack. Startups build commercial services and features on top of core open source projects to make them more useful.
It’s a tried and tested model, but the problem is that businesses are increasingly moving away from open source in some form, whether by switching to less permissive licenses like Grafana or giving up entirely like HashiCorp. The reasons are generally the same. This is to protect the company’s bottom line and ensure that larger companies are not leveraging the open source credentials of their products.
A whole new licensing paradigm is emerging to solve the “use and abuse” problem of open source. Sentry, a multi-billion dollar developer tools company, is pushing the concept of “fair source,” trying to live up to “open” software without actually going open source. “Open source is not a business model,” Chad Whitacre, head of open source at Sentry, told TechCrunch in an interview last month. “Open source is a distribution model and primarily a software development model.”
Using open source to market your company to the developer community is far from a new concept, but Pydantic is a bit unusual in that it uses open source projects entirely as a marketing tool. So rather than trying to turn Pydantic itself into a commercially viable product, it’s leaning into the gravity of the project and instead selling other products that aren’t directly related, like Logfire.
“Instead of building a hosted version of Pydantic, which is a library, we built Logfire, which is an observation platform,” Colvin said. “The trust we have as a company in the Python community is on a different level than many other companies. We went to PyCon US this year right after announcing the beta version of Logire. We had people flocking to our booth all week long. Because everyone knew the library and so did we. On the other hand, if we had come out as a new observation company, people would have ignored us. Pydantic is a better known brand than almost every other brand in the Python world outside of big names like AWS and Google.”
Logfire is essentially a Datadog competitor designed to give developers insight into software performance. However, Pydantic wants to make organizing the entire observation process simpler. As Colvin said, it wants to be “to Datadog what Vercel is to AWS.”
“AWS has a huge amount of features and is very complex to use,” he said. “Datadog is also an incredibly complex piece of kit, so we’re trying to build a simpler experience for developers. In the long run, we want to be able to use Logfire instead of Datadog. But in the medium term we want to be a simpler solution for small teams.”
This is definitely an interesting approach to building a business. The startup is essentially using Logfire to solve a different problem for the same people who use Pydantic.
“They are different, but there is some overlap in that everyone who needs Pydantic, which is a validation library, also needs observability,” Colvin said. “So we’re targeting solutions for those same people.”
show me the money
In the early days of Pydantic, Colvin secured decent sponsorship from some of the framework’s biggest enterprise users, including Salesforce, which donated $10,000 in 2022. AWS and GitHub donated $5,000 and $750, respectively.
But as businesses grew and VCs became involved, corporate donations became less frequent.
“We had some pretty generous support, especially when I was working on my own,” Colvin said. “But now with Sequoia’s support, people are having less trouble with their wallets!”
Now that Logfire is generally available, Pydantic hopes to build on the more than 2,000 developers and 150 companies it attracted during its beta phase. The focus is now on AI companies.
In addition to lead investor Sequoia, Pydantic’s Series A round saw participation from Partech and Irregular Expression, along with angels such as Logan Kilpatrick and Jason Liu. Colvin said the new cash will be used primarily for salaries and to augment the existing 13 employees spread across the U.S. and Europe.
“We will mostly use the funds to hire a developer,” Colvin said. “At some point, we might hire them for a sales role, but right now it’s just an engineering job.”
