- Palo Alto-based Symphony encrypted fintech cloud messaging startup announced it raised $165 million
- This funding round reported values Symphony at a $1.4 billion valuation
Symphony Communication Services LLC is a Palo Alto, California-based encrypted fintech cloud messaging startup for Wall Street firms that has 430,000 users and is considered the world’s largest digital financial network. As a comparison, Bloomberg has 325,000 clients.
Recently, Symphony announced it raised $165 million at a reported $1.4 billion valuation. The $1.4 billion value is up from a $1 billion valuation from several years ago. According to CNBC’s sources, Symphony’s investors did not value the company higher since it did not reach runaway growth where the user base doubled year-over-year. However, adoption of the platform is still increasing at a rapid pace.
Standard Chartered and MUFG Innovation Partners Co., Ltd. and a group of existing and other investors also participated in the round. Including this round, Symphony has raised a total of $460 million since it was founded.
“Capital Markets’ interest in accelerating Symphony’s growth is as strong as ever, we are very pleased to welcome Standard Chartered and Mitsubishi UFJ Financial Group to our strategic investor community,” said Symphony founder and CEO David Gurle in a statement. “This investment establishes an unprecedented coalition of East and West, North to South and unites fragmented communication infrastructure into a mission-critical secure and compliant collaboration platform – an unprecedented global effort to accelerate efficient financial workflows. Symphony’s community is coming together to build stronger connections, automations and expanded customer reach as part of their digital transformation initiatives.”
Some of Symphony’s previous backers include over a dozen global financial firms including JP Morgan Chase, Goldman Sachs, and BlackRock. Gurle told CNBC that large institutions who bought 1,000 seats are buying 5,000 and even 10,000 more. And HSBC is deploying the Symphony platform across capital markets and want their customers on Symphony as well.
“Standard Chartered is excited to support Symphony as one of the leading collaboration platforms deployed by the largest financial services firms globally. This strategic investment will provide the Bank with greater insights into future trends in the enterprise communication and workflow collaboration space. Furthermore, as a leading global bank, Standard Chartered offers Symphony growth opportunities in our footprint markets across Asia, Africa, and the Middle East,” Standard Chartered’s Global Head of SC Ventures Alex Manson pointed out.
This growth has especially resonated with back-office employees who outnumber traders and executives. In wholesale banking jobs globally, there are 6 million potential users of Symphony according to Gurle via CNBC.
“Symphony has generated tremendous interest for revolutionizing buy-side and sell-side secure messaging and collaboration in global markets, both in content curation and consumption as well as the workflow across the whole deal life-cycle,” added Yann Gérardin — the Deputy Chief Operating Officer and Head of Corporate and Institutional Banking at BNP Paribas. “We are proud to support the company’s next stage of growth and to ensure its ongoing adoption by our clients and in our company.”
This round of funding was oversubscribed. And Gurle turned down a $200 million funding round at a $2 billion valuation from a single investor since the terms were “onerous.”
“While we’re thrilled with Symphony’s traction and global network buildout, we also believe the transformative period of Symphony’s journey is just beginning,” noted Darren Cohen, the global head of Principal Strategic Investments (PSI) at Goldman Sachs. “The rapid proliferation of Symphony bots and application integrations across the trade lifecycle and throughout the enterprise gives us a glimpse into the future. Symphony’s secure infrastructure and diverse ecosystem will enable the industry to unlock significant operational efficiency and meaningfully enhance the client experience.”
In terms of profitability, Symphony is far behind Bloomberg. A Bloomberg terminal with messaging and data feed costs about $24,000 per year and Symphony charges only $240 per user per year.
“We are excited to repeat our support and commitment to the growth of Symphony with an additional investment,” JPMorgan’s Head of Digital Strategy & FinTech at Corporate & Investment Bank Michael Elanjian. “Symphony’s unique, secure and compliant workflow platform is driving meaningful transformation in our industry for us and our clients.”
In the CNBC interview, Gurle said that his company is “making a dent in the Bloomberg fortress.” And the company’s customers are using messaging on Bloomberg to do trades but want to automate that to save on operational costs and to reduce errors.
Symphony has offices all over the world. And the company recently set up an R&D center for Symphony in France. In a tweet, French President Emmanuel Macron thanked Gurle for doing so.
“Digital transformation is central to Mitsubishi UFJ Financial Group’s future business, and collaboration with Fintech companies is a crucial part of that process. Forming agile partnerships with exciting and innovative companies like Symphony helps us remain a partner of choice in a changing world,” explained MUFG Innovation Partners Co., Ltd. president and CEO Nobutake Suzuki.
So how did Symphony grow traction in a short amount of time? Back in 2013, Bloomberg admitted that its reporters were trained to use a function in the data terminals that allowed them to view the contact information of subscribers and monitor login activity in order to advance news coverage. Bloomberg shut down the loophole, but a number of banks were furious about the issue.
At that time, Goldman Sachs was putting together a project called “Babel,” which was a platform that was consolidating the communication tools that the bank was tapping into. About a year later, Goldman was planning to spin out a service from Babel and the financial giant received many calls from banks that wanted to get involved in the deal, according to Business Insider’s sources.
However, a consortium of 14 banks and financial companies ended up buying Perzo — which is an encrypted messaging startup and a lot of Goldman’s Babel technology was integrated into the service. The 14 banks ended up investing $66 million in the service including Goldman, Morgan Stanley, JPMorgan, Bank of America, Deutsche Bank, HSBC, and BlackRock. Google, Natixis, Societe Generale, and UBS also invested in the project at a later stage. Symphony also signed deals at an early stage with Dow Jones and McGraw Hill Financial (owner of the Standard & Poor’s rating agency).
Perzo was put together by Gurle — who is a former Thomson Reuters executive. Gurle previously oversaw a real-time communications operation at Microsoft for three years and helped launch the Lync messaging app. Prior to working at these jobs, Gurle graduated from a prestigious ESIGETEL engineering school.
As of the end of 2018, Symphony was reportedly sending out about 3 million messages per week. And now it is getting closer to 9 million. This is largely driven by bots, which are notifying people about crucial news and trade fails. Currently, there more than 1,000 bots and apps on the Symphony platform and about 10% of the messages sent through the platform are generated by bots.
