Some startups bristle at being called the Uber of something else. Asked to describe his company Rainforest QA, Fred Stevens-Smith volunteers it. If Uber seeks to maintain an advantage over rivals in part through the massive amount of data its collected on rides booked through its app, Stevens-Smith’s startup is doing the same with quality assurance tests.
Founded in 2012, Rainforest spent much of 2017 focused on adding artificial intelligence to its thousands of QA tests. “The data created by our customers running tests has given us a giant head start,” Stevens-Smith says. “It’s like the self-driving Uber, except not a failure.”
With millions in revenue on growth north of 100% for each of the past three years, Rainforest has emerged as one of the leading startups in the QA space by harnessing the crowd: the startup counts at least 60,000 testers in its network, matching them with builds and new services that customers want tested before they reach the public eye. While automation takes over in more sectors, Rainforest has promised to serve as a bridge. “There are amazing off the shelf tools that can help you automate testing today, but the customer, the end user, is still a human,” Stevens-Smith says. “The only strategy that makes sense today is a hybrid of both the manual and the automated.”
Now that Rainforest’s CEO believes that his company has struck the right balance, he wants to scale the business fast. Just less than two years from raising a $12 million Series A round from Bessemer Venture Partners and a group of other investors including Marc Benioff, Rainforest has loaded up with a new round of funding, this time a $25 million Series B from Silicon Valley Bank’s venture practice.
According to Stevens-Smith, Rainforest went with SVB over adding a new name-brand venture firm – its previous investors including Bessemer, Sutter Hill Capital, Rincon Ventures and Initialized Capital joined in – because the bank came highly regarded by other founders – and promised to stay out of his way. “The way we think about funding, it’s not something you should care about as someone who works at Rainforest. Yes, it’s an external validation of the business that we hit the key metrics, and that’s fantastic and let’s celebrate that fact,” says Stevens-Smith. “But venture rounds are stepping stones on the way to building a real business.”
Rainforest will split the $25 million into thirds, with a third going to sales and marketing, a third to product and design, and a third to its AI team of three data science PhDs. While other startups have raised tens of millions in the QA category, Stevens-Smith says those businesses are more commonly potential partners, providing tools such as infrastructure, than they’re rivals. “I wish I had a better story about this, because it’s fun to have enemies, but I don’t feel that,” he says.
Rainforest’s momentum would’ve been a surprise midway through the program in the summer of 2012. Stevens-Smith and cofounder Russell Smith, both of whom had moved from the United Kingdom for the opportunity, looked set to bomb out of the program. Compatriot and Y Combinator cofounder Paul Graham told them their name – then Cldrdr (pronounced “cloud radar” – and original idea, for business intelligence around cloud servers, were two of the worst the program had seen. Using their remaining time to try new ideas, the two found that QA was an area where many of their founder peers were willing to pay for a better product. They made QA testing their focus just three weeks before demo day.
With fresh millions to spend, Rainforest’s challenge will be to “build discipline and structure,” says Stevens-Smith. “We’ve proven we can execute on the opportunity in North America,” he says, adding an expletive for emphasis. “Now it’s our objective to be come a real business generating cash flow.”