We’ve sold 5% of Explosion

Since founding Explosion in 2016, we’ve run the company as a profitable business. This stable platform has helped spaCy grow to one of Python’s most popular open-source projects. We’ve funded spaCy from sales of our annotation tool Prodigy, which we’ve now sold to over 500 companies, with thousands of customers in total. The next step for Explosion is Prodigy Teams: a hosted version that adds collaboration and production stability features, while maintaining the data privacy and programmability. Doing this project well is much more important to us than doing it cheaply, so we decided to consider external investment, so long as we could find a deal that wouldn’t compromise the direction or stability of the company. We’re pleased to announce that we’ve found an investment that ticks all the boxes.

SignalFire have made an investment of $6 million into ExplosionAI GmbH, in return for 5% of the company and warrants that will allow them to invest a further $12 million at the same price. Oana Olteanu will join our board as SignalFire’s representative. The funds will be used to finish our next product, Prodigy Teams. The funding has also allowed us to expand the spaCy team without jeopardizing the project’s long-term sustainability or stability.

A lot has changed since 2016, and in that time we’ve earned the right to say that our way of running Explosion has been an objective success. We’ve succeeded because you’ve trusted us enough to invest effort into the software we’ve developed. We’ve asked you to build on top of our open-source library spaCy or purchase our annotation tool Prodigy, and hundreds of thousands of you have taken us up on that.

It’s become common for people in our position to turn around and act as though they owe their users nothing. It’s common, but that doesn’t make it decent. It’s also not good business. We’ve talked before about building a decent software company, and the first prerequisite has been to make sure we’re actually in control of where the company ends up. We’ve seen most venture investments as incompatible with that. It would have been wrong to promise you all that our plan was sincerity and stability, while promising investors that our plan was to go big or go home.

For this deal, we had some other requests that were important to us. We insist that the company’s corporate structure match its operating reality, so Explosion is staying a German company, and not reincorporating in the U.S. We also asked SignalFire to include what’s now known as a Weinstein clause, a contract representation that would help push the worst actors out of the industry if widely adopted. And most importantly, we haven’t promised any timeline for an exit or further investment, and our goal is to run a stable and profitable company.

We still want to keep the Explosion team quite small for now, as we’ve always believed that a larger team doesn’t necessarily build better software. We’ve been delighted to announce that some amazing people have agreed to join the company, and we have some more announcements on the way. Most of all, we look forward to continuing to build software as before. Our plans for the company are still the same — although we definitely have some cool things we’re excited to share once they’re ready.