Flock Raises Another $150 Million, Valuation Now At $3.5 BillionBy Isabella Cheng, Published Feb 16, 2022, 09:00am EST (Info+)
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:
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:
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:
Over the last year, Flock has most significantly expanded its engineering and support staff, with sales staff growing modestly:
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.
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.
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.
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