PubNub Gets Another $20M To Scale Up Its Low-Latency Messaging Network

PubNub, a startup out of San Francisco that has built a data network focused on messaging for apps, IoT hardware and other low-latency services, has raised another $20 million in a Series C round of funding. It seems that 20 million is the magic number for PubNub at the moment: the company — which works with some 2,000 businesses and partners including high profile names like McDonald’s, CBS and Yahoo — says that today it averages 20 million real-time transactions per minute across 200 million devices globally. 

This latest round, which brings the total raised by PubNub to just over $35 million, was led by new investor Sapphire Ventures (SAP’s venture arm), with Relay Ventures and Scale Venture Partners also participating. 

Todd Greene, PubNub’s CEO, says that the company will be using the investment to continue scaling out its business, specifically internationally and into expanding the kinds services that it offers to its users.

PubNub today focuses on providing a super secure and reliable two-way data network for apps and other services that rely on regular and small signalling messages in order to work — think something like a CDN for very small and frequent messages. (One example: a smart heating system that operates remotely when you indicate on an app for a room to get warmer or cooler.) So far it has built up around 70 SDKs so that developers can integrate PubNub’s network into their own.

In its earlier days, PubNub was more narrow in its focus: initial customers were largely mobile apps where PubNub provided a back-end product to enable communication within them.

But the evolution of IT services to IP networks; and a wider trend of smart and connected-everything, have expanded the kinds of applications and customers that need special, reliable networks for their data, and in turn look to PubNub to provide it.

“We keep getting surprised by use cases we hadn’t considered before,” Greene said, adding that “there is no one majority” when it comes to how PubNub’s network is used most.

The IoT and smart home applications, for example, was something that PubNub noticed and began to pursue for more business only in 2013. “We looked at our customers — at the time there were only 500 — and realized how many were putting PubNub into connected home devices, so we decided to invest in that,” Greene said. While IoT is not the biggest part of its business today, it’s definitely the fastest-growing, he added.

In addition to social and consumer apps (where it can for example provide info to show whether a user is online or not), other verticals using PubNub include financial and business services (real-time share movements for example, or collaboration services), as well as audience participation services — for example getting a crowd to vote or participate in a messaging service during a football game with live results posted on a screen.

Indeed, it’s the potential of where else PubNub’s network might get used longer term that interested Sapphire.

“We’re seeing a paradigm shift from data at rest to data in motion, but the infrastructure needed to scale and connect real-time data streams for app-to-app communications as well as for communications between IoT devices is costly and cumbersome,” “Sapphire Ventures is thrilled to back PubNub and lead this financing as the company is experiencing remarkable growth in usage and number of messages delivered per second globally,” said Jai Das, managing director, Sapphire Ventures, in a statement. “The customer feedback for the company’s service was off the charts and we see a bright future ahead.” 

Gartner estimates the total market for application infrastructure and middleware — of which messaging middleware like PubNub’s is a part — is a $21.5 billion market.

The company is not disclosing revenues, profitability or valuation except to say, in Greene’s words, that “the numbers are looking rosy. Very solid and exciting.” And nor is it disclosing much about future plans. But there are some areas to consider: first is that today the company doesn’t use its own data centres but an amalgamation of third-party services. That is one area where it may invest. The other is a move to potentially offer its service as something to work within private networks too.

“Today we offer the service the global network on which people deploy applications. We don’t have anything to announce yet on hybrid solutions but it is something we are considering,” Greene said. Indeed, this would open up the company yet again to more business, considering that Greene says one of its biggest competitors today is the alternative of companies building similar messaging networks in-house. Among the many others also competing in this space are services like Realtime, Pusher and Google.