Flock Raises Another $150 Million, Valuation Now At $3.5 Billion

By Isabella Cheng, Published Feb 16, 2022, 09:00am EST (Info+)

Flock has raised another $150 million USD, making it an astounding $300 million raised in the last 7 months, adding to last summer's A16Z-led $150 million round.

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This funding puts Flock in a position to expand aggressively over the next few years. Inside this report, we examine the new funds raised, estimated revenue, Flock's current valuation, its expansion over the last year, and how it compares to Motorola who is now moving into Flock's core market.

$150 Million Led by Tiger Global, Now Over 2x Previous Valuation

Flock announced it raised $150 million in Series E funding led by Tiger Global, a large hedge fund/VC investment firm, joined by 776 and Spark Capital. Flock posted a video of Founder/CEO Garrett Langley speaking on Flock's 2021 achievements and announcing this newest fundraising round:

Total Funds Raised Unparalleled for Video Surveillance

In all, Flock has raised ~$380 million in its 5 years as a company. IPVM also covered Flock's $47 million fundraise in November 2020. This level of fundraising is unparalleled in the video surveillance industry. Oosto/Anyvision is the only comparable company in the industry that has raised a similar amount, with $235 million from SoftBank in July 2021.

Revenue Estimate - Mid Tens of Millions

While the company did not disclose revenue, we estimate 2021 revenue was in the mid-tens of millions, with Flock reporting the company "tripled our revenue for the third year in a row."

Flock Safety has rapidly grown the number of cities its products are deployed in, the graph below tracks Flock's claims over the last 4 years:

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IPVM estimates Flock's revenue is between ~$16 million and ~$50 million, based on the 1,500 cities Flock says it is in and assuming an average number of Falcons deployed of 5 to 15 per city and ~$2,250 per camera per year:

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Valuation

Flock's valuation is now $3.5 billion, more than doubling its valuation in July 2021 ($1.5 billion) when it raised $150 million from A16Z.

This gives Flock an ~100:1 price to sales ratio. This is incredibly high for conventional video surveillance standards and high even for tech but considering the company's incredibly high growth rate, it is certainly feasible.

Growth Rate 2022 - 20225

Even if Flock does not triple each year going forward, and they "only" double, the company has the potential to be a multi-hundred-million dollar revenue business with substantial profits. Part of this is dependent on competition (we contrast to Motorola at the end of this post).

Employee Growth Over 2x in 2021

Flock more than doubled its headcount in 2021, adding 225 "full-time, fully remote employees across 35 states" which brings the current headcount to 350 people.

LinkedIn insights show hiring accelerated in early to mid-2021, but has slightly slowed down since:

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Over the last year, Flock has most significantly expanded its engineering and support staff, with sales staff growing modestly:

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Flock commented on their hiring expansion. Engineering and technician new hires are typical, but Flock also pointed out hires in government affairs:

We’re hiring hardware and software engineers to build devices and sensors that capture more types of evidence like gunshots or illegal street racing; full-time technicians to accelerate installation and maintenance of those devices; and leaders in supply chain, logistics, marketing, and government affairs.

Product Expansion

As Flock grows, it will expand outside of its traditional niche of LPR recognition, particularly given its strong financial backing. For example, Flock already launched its audio detection device, Raven, in October 2021, which Flock touted "when paired with your traditional Flock Falcon license plate reader, police can go from a gunshot fired to a suspect license plate - instantly."

CEO Langley teased that there are "a ton of exciting updates planned for the rest of the year."

Network Effects Attractive But Approach Risky

Flock's network effects are no doubt attractive to investors to justify such a large round of fundraising, relative to the video surveillance market. Since Flock Safety is a cloud LPR system operated by Flock, the more cameras that are connected, the more possibilities to analyze for crime, including connecting to neighboring polices' cameras, and to connect to criminal databases.

However, given the key role that network effects play in Flock's success, the company has increasingly become more aggressive in marketing to local police departments and setting up essentially private-public partnerships. Sometimes, Flock has overstepped and installed pilots without proper permitting such as in Florida, which then leads to removal and is negative for the company.

IPVM has also observed how Flock worked with a Texas police department to spread Flock cameras to local neighborhoods and agencies. However, again, Flock lacked the proper permitting to erect these cameras. Further, the police chief stepped down after the city discovered he had signed a Memorandum of Understanding (MOU) with Flock for his department to use privately-owned Flock cameras, although the chief did not have the authority to sign the MOU.

Reduce Crime by 25% by 2025

Flock again reiterated their ambitious goal to reduce crime by 25% within the next 3 years. Whether or not Flock can reach this goal remains to be seen. However, the company is certainly financially set up to make a difference now given this most recent fundraising round.

"Crime Reduction Within An Ethical Framework"

Flock touted that the company "went from helping your communities solve ~185 crimes per day, to +500 crimes per day," while accomplishing crime reduction "within an ethical framework," linking to its ethics center webpage.

Flock points to two main considerations encompassing their commitment to ethics, including limiting Flock technology to "limited responsible monitoring, not for 24/7 surveillance" and allowing customers to "100%" own their data.

Privacy Concerns

However, the ACLU and privacy advocate EFF have continued to warn of the potential civil liberties issue that are inherent in any sort of surveillance system, particularly one that is intimately tied to police enforcement. For example, the EFF has spoken to IPVM about possible illicit use of the system to track people as well as the dangers of dragnet surveillance and inaccuracies with license plate readers/in license plate databases.

Flock is poised to expand aggressively over the next few years, but its expansion will risk these privacy concerns, given its position as a giant private, unregulated entity that has a critical role in public policing work.

Motorola L6Q Comparison

Motorola announced the L6Q last month, which has the same fundamental architecture and approach as Flock's Falcon. In the near future, the L6Q may not materially affect Flock's sales but certainly by 2023 L6Q could emerge as a material competitor to Flock, making it harder for the incumbent Flock harder to grow as Flock will not be the only player in the market. Until now, Flock has been the only option for a quick deploy LPR offering.

If Motorola is able to execute on its rival, this may put significant pressure on Flock's ability to grow, especially in the city-wide, larger scale projects that Flock will need to win to achieve its growth trajectory from this recent funding.

However, if Motorola has issues with the L6Q, Flock now has so much money that Flock could quickly establish a dominant position in LPR as Motorola and other incumbents struggle to match the pace and focus of Flock.

5 reports cite this report:

Police Officer Abused Flock LPR Database to Stalk Ex-Wife on Nov 04, 2022
A Kansas police officer was arrested for abusing Flock's LPR database to...
Top Growing And Declining Companies (By Headcount) June 2022 on Jun 22, 2022
IPVM analyzed 405 physical security companies' headcount changes from January...
Flock Safety In-House Installers are "The Backbone of the Company" on Jun 01, 2022
Flock Safety is growing rapidly, raising $300 million in the last year and...
Genetec Takes On Flock And Motorola With Quick Deploy LPR on Mar 18, 2022
Genetec told IPVM "Flock and Motorola L6Q is the competition" as they target...
ACLU Critiques Flock Safety on Mar 04, 2022
The ACLU in a recent report warned of the "mass-surveillance system" that...

Comments (3)

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Until now, Flock has been the only option for a quick deploy LPR offering.

Motorola has had the L5Q for while though not promoted a lot. The L6Q is the replacement.

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It is interesting Flock’s growth and bright future is based on encouraging Police Departments deployment of video IDentification systems paired with microphone based audio detection systems ‘into public places. Today it would be used for Identifying vehicles linked to gun shots an street racing. Since both crimes that can endanger the public, they may also be used to justify the installation of video cameras and microphones into public areas, collecting information that can be linked to someone’s data base.

On the surface this intrusion into public places seems justified to identify the source of a gun shot leading to a license plates requires basically two components. A microphone located in a public place paired with a camera watching those areas and recording the audio and associated video.

Today its’ primary application is to detect gunshots and street racing, and match it to vehicle license plate recognition and location. A good reason and only a slight invasion of privacy, right?

This is however only the beginning.

Enhance features of audio captured in order to provide VOICE ID, then pair that with FACIAL Recognition and GeoLocation. Now you can ID individuals in a conversation and document the location that conversation is taking place.

Further software enhancements increase the microphone sensitivity while pairing it with Higher resolution video encorporating broader field of views. The result could provide the ability hear and identify areas ‘not in public view’, such as open vehicle windows driving by, vehicles parked on the street, residential yards, or windows adjacent to that street. The microphone and video sensor pairing could hear, record, and visually capture any phone or personal conversation taking place within its audible and/or visual range. Its’ audible recognition paired with its’ facial recognition software could identify, locate, log, and add it all to a database.

Many cameras already have microphones embedded, and some of this is already being done to some degree around the world. With millions of new investor dollars being earmarked for hiring of new engineers to develop more technologies, and enhance existing products, the time from the initial product concept to the enhanced product implementation could be very short.

A corporation seeking to expand and dominate a market primarily ‘reducing crime’ by placing listening and viewing products into public places should cause everyone concern. If untethered, the likely enhancement and evolution of those products embedded into public places could represent the greatest threat to individual privacy in the history of this country.

The Corporate culture and integrity of the technology provider combined with that of the public officials and their gatekeepers responsible for its’ purchase and application must be impeccable in order to avoid potential abuse.

While a private corporate entity stating privacy concerns and intended policy goals is a prudent marketing tool, Social Media companies over the last few years have shown that owning your data, and keeping it private are two entirely different things.

Even with best intentions, private companies managing individuals’ data security can be problematic, demonstrated last year by Verkada. If intentions are NOT the best, then one shudders to imagine how that information could be exploited. Beyond that, there is no assurance that government entities requirements will not override corporate commitment to ‘ownership and privacy of individual data’ when it is deemed ‘in the public’s interest’ to do so.

As to the integrity of big growth corporations in the Security industry, you only need combine last years Verkada incidents, with Flocks’ recent Florida and Texas experiences to get a taste of what is taking place around this country and the world. It seems that we have a precarious and dangerous road ahead, with individual and data privacy eroding rapidly.

One might suspect that even the PRC would be impressed with this technologies potential. It wouldn’t be to surprising if they were not already invested in, or negotiating the licensing of this and future technology for expansion of their own programs.

It might be interesting to know the actual cash sources behind some of the Venture capital that is rapidly ‘flocking’ into Mr. Langley’s corporate bank accounts.

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"This gives Flock an ~100:1 price to sales ratio. This is incredibly high for conventional video surveillance standards and high even for tech but considering the company's incredibly high growth rate, it is certainly feasible."

Exceedingly high for conventional services business that have long term support cost. The capital raise is a fantastic idea if investors can justify paying double the price it would have cost them a year ago? The question is has the past year numbers of growth supported it and has the long term cost of supporting this HaaS model been properly accounted for in those projections?

"Over the last year, Flock has most significantly expanded its engineering and support staff, with sales staff growing modestly."

The marketing team has done a fantastic job, supporting the continued growth as camera numbers increase, and thus service counts increase across a larger geographical area is another matter altogether.

From Flock's side the raise absolutely makes sense and is highly intelligent. From the investor side its a more questionable take based on current market conditions but again I receive financial compensation for selling Vigilant LPR. So will be the first to admit the perspective bias.

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