Seed to Unicorn, the Auth0 story

Diego Gonzales Bravo Draper Cygnus founder

How Draper Cygnus made some big moves in LATAM

At Stratal, we like to be closely engaged with the businesses we work with. So when new client, Draper Cygnus, went quiet we knew that the news would either be very good or very bad.
Thankfully, as we now know, is was good, very good. Draper Cygnus was in the middle of one of the biggest exits in the LATAM marketplace, as Auth0 (an authentication service) was sold to identity management giant Okta for a reported US$6.5bn.
I talk to Draper Cygnus founder, Diego Gonzales Bravo about the journey from seed investment to Unicorn.

JP: ‘Diego, set the scene for us, how did you come to invest in Auth0?’

DGB: ‘James, I have to say we were coming to the end of deployment of our very first fund. We were, to some extent, rookies in the VC game, but we thought we could still write a few cheques even with the comparatively meagre allocation that we had to use up.’ At that stage we were definitely an Angel Fund (Cygnus existed as an Angel Fund before its partnership with Silicon Valley guru Tim Draper), even though we had invested in some 15 businesses at the pre-seed to seed stage and gone through literally hundreds of opportunities in our local market. Given that we were at the closing stages of our deployment, we could have opted to play with more conventional fare for Angel Funds in the region, even clones of US startups, but we wanted to diversify and we liked what we saw with Auth0.

JP: ‘So what did you see that piqued your interest?’

DGB: ‘Initially we saw a simple product serving a widespread need in one particular user segment. Further inspection revealed complex and unique IP, with a world class team – and by that I meant significant years in major organisations like Microsoft. And, of course, they were there in our mandated geography with significant links in the local ecosystem.
One further thing, on reflection, really attracted us to Auth0. They were not consumed by selling the product to C-Suite. They were much more interested in engaging with developers and creating a culture of new software lines, where Auth0 would be front of mind for those creating them. These guys became the ultimate sales force for the Auth0 product.’

JP: ‘Was it really this straightforward?’

DGB: ‘Not necessarily. They had some success early, but an important moment came when the founding team brought in an experienced CEO, Jon Gelsey, who had spent seven years at Microsoft as Director of Strategy & M&A, and previous to that head of Intel Capital. A very smart hire and one of our first contacts with the business. Maybe with the fusion of talents it was a more clear path for Auth0 to succeed.
I have to say, our assessment of Auth0 was, indeed, straightforward. We moved quickly to secure our participation in the round, a US$2.4m seed, though we did manage to negotiate a 20% discount. Looking back, a great piece of business. A year later, Auth0 would raise US$9m at a US$30m valuation. They went on to raise significantly more year on year.’

JP: ‘Away from the pure financial upside, this one deal must have meant a lot to the team?’

DGB: ‘A lot to us and a lot to the whole Argentine ecosystem, indeed, all of LATAM I’m sure was delighted by this news. The founders, Matias and Eugenio are and will remain inspirations to our local entrepreneurs with their success but also with their willingness to give back to the community. Even we, as their investors, appreciated their desire, attitude and constant availability as mentors and speakers.’

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