Banjo latest California start-up to attract big funding round

Banjo became the third Silicon Valley company to announce a substantial private financing round on Wednesday, as the social networking-meets-data analytics company raised $100m from SoftBank.

The investment, which likely values Banjo in the hundreds of millions of dollars, comes despite the company generating only about $1m in revenue last year from a new line of business that it promises will "ultimately . . . bring order to the chaos of global data".

Nikesh Arora, the former Google executive who as vice-chairman at SoftBank led the investment, ticked off a string of buzzwords as he explained why Banjo "has the potential to be very interesting".

"Banjo is in an interesting space, bringing together the ideas of big data, social, local, mobile and trying to derive value from that combination for both consumers and businesses," he said.

The investment follows big cheques on Wednesday for a pair of two-year-old San Francisco start-ups: human resources software company Zenefits, which raised $500m at a $4.5bn valuation, and consumer-lending service Affirm, which banked $275m in debt and equity.

Banjo has made several attempts to combine smartphone-based social networking with location data since it was launched in 2011 as a consumer app for friends to keep tabs on each other's whereabouts, based on their postings to sites such as Twitter and Foursquare.

Two years later, Damien Patton, Banjo founder and chief executive, moved the company in a new direction: using the aggregated data collected from its users and their networks of friends to create an early-warning system for traders, brands or news organisations. He said this differed from other social-media analytics tools because it was designed to identify events in specific locations almost immediately, based on a sudden change in the volume or tone of posts in a given area.

The resulting data-analytics product, called Banjo Enterprise, was launched last year and has attracted "dozens" of customers. One of its investors, John Malloy at BlueRun Ventures, the venture capital firm, told Inc magazine last month that he expected Banjo's sales from the system to increase from $1m last year to about $20m this year.

"People aren't investing in us based on revenue," Mr Patton told the Financial Times. Instead, he said investors see the potential in Banjo's technology which he likened to a "crystal ball".

Much of the $100m will go towards hiring data scientists and engineers who can build out its analytics system.

Mr Patton said Banjo collects data from some 1.2bn people across social networks including Twitter, Instagram, China's Weibo and Russia's Vkontakte.

He added that the company also had data partnerships with some social networks, through APIs, pieces of code that let programs run on top of other systems, and was able to obtain public posts in other ways.

"You just need to build a social graph and understand how often people post," he said. "Very efficiently we can get at that information from all the social networks . . . It's not just reliant on the people from the [Banjo] app."

The SoftBank funding takes Banjo's total to $120m from investors including venture capital firms Balderton Capital and VegasTechFund.

"The company has always enjoyed a pretty healthy valuation because the technology is so unique. To process this kind of data at the scale that it does, that's what is remarkable," said Suranga Chandratillake, a partner at Balderton.

Balderton is not participating in the current round. Mr Patton said this was at his request, to prevent further dilution of his shareholding.

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