Collison brothers back software start-up Retool in $20m funding round

22 Dec 2021

John and Patrick Collison. Image: Stripe

The US start-up has secured the backing of ‘software luminaries’ such as the Collison brothers, bringing its valuation to $1.85bn.

San Francisco software start-up Retool has successfully closed its Series C funding round, bringing its total value to $1.85bn. It was aided by Stripe founders and Irish entrepreneurs, John and Patrick Collison.

Founded in 2017, the company focuses on building tools for software companies to develop their own internal software faster. Announcing its funding news, the company said that it had “partnered closely with software luminaries” such as its existing investors, former Github CEO Nat Friedman, former Atlassian leader Jay Simons as well as the Collison brothers.

In a blogpost published today (22 December), Retool CEO David Hsu wrote that he used an unconventional approach to fundraising for the company’s Series C.

Retool raised a total of $20m in its latest funding round. The start-up deliberately did not raise a high amount as Hsu believed this could adversely impact its team of employees.

Hsu said that while maximising Retool’s valuation and money raised “might feel good, it hurts the core constituency that got us here: our team”.

Justifying his position, Hsu compared the IPOs of Uber and Coinbase to claim that the latter’s much lower valuation resulted in “much better returns for employees”.

He also pointed out that: “Investors typically have pro-rata rights to protect their ownership stake, but employees don’t. If you look at companies that consistently raise large amounts of capital, you’ll see that employee returns suffer, because their ownership stake will get diluted substantially from their initial ownership position.”

Hsu said that the conservative fundraise of $20m was “the least amount possible” that the start-up needed to reach its goals, he claimed.

Last year, Retool raised $50m in a round led by Sequoia Capital in which the Stripe founders also participated.

Stripe recently announced a small crypto engineer hiring spree back in October, which led watchers to question whether the Collisons were once again eyeing up the crypto space.

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Blathnaid O’Dea was a Careers reporter at Silicon Republic until 2024.