Founded in 2014 and based in Austin, RigUp connects independent contractors with employers primarily in the oil & gas industry, with ongoing expansion plans into the renewable energy sector. The company's revenue comes from taking a percentage of the payment for each completed job connected with oil & gas basins across the continental US. Its clients include Parsley Energy, Ameredev and Anadarko.
Here's the company's fundraising history, per the PitchBook Platform:
May 2014: $3M | $10.96M valuation
April 2016: $15M | $59.69M
Jan. 2018: $45.8M | $125.8M
June 2018: $10M | $220M
Jan. 2019: $60M | $300M
The new funding is a rare mega-round for the VC-backed oil & gas industry, which has historically been dominated by a large quantity of relatively small deals. For example, the amount of capital invested roughly followed depressed oil prices between 2014 through 2017, but the number of deals peaked at a high of 194 in 2015 despite lows in oil prices.
Here's the breakdown of VC deals in oil & gas since 2010, per PitchBook data:
Safety in softwareFor RigUp, funding a software platform for the industry might be a safer bet amid troubled times for oil & gas production. As Brent crude and West Texas intermediate oil struggle below $60 per barrel, heavily indebted US-based oil & gas producers are feeling the pinch.
As of August, 26 producers have filed for bankruptcy this year, compared with 28 for all of 2018, according to The Wall Street Journal. This has led to a 5.7% default rate for energy companies with junk-rated bonds, up from 3% a year prior and almost equal to the 5.8% from September 2015.
However, Josh Raffaelli, managing director at Brookfield Growth Partners, told PitchBook he is confident in his firm's decision to invest in RigUp.
"Dating back to the 1900's, we've found there is a trend line in oil that overrides volatility, such as the events in Saudi Arabia a few weeks ago," Raffaelli said, referring to a drone attack against Saudi Arabia's Abqaiq and Khurais oil processing facilities that knocked out half of the kingdom's oil supply. Beyond the oil markets, Raffaelli expressed confidence in RigUp's developing entrance into the renewable energy sector as a way to further protect against the uncertainties in the oil & gas industry.
His optimism appears to be confirmed by the hard numbers. RigUp expects to clear $2 billion in transactions this year, a more than 200% YoY increase from the over $600 million it processed in 2018, despite the industry's bankruptcies and deflated commodity prices.
Lead investor a16z also seems to believe in the company's software-centric offering, as RigUp's deal represents one of the largest rounds the Menlo Park-based firm has participated in this year. In July, the firm co-led Lime's $310 million Series D, in addition to participating in Samsara's $300 million Series F last month and Reddit's $300 million Series D in February.
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