Data integration startup Fivetran Inc. today announced two major business milestones: It has closed a $565 million funding round at a $5.6 billion valuation and it’s using part of the proceeds to finance the acquisition of HVR Software Inc., another data integration provider.

The Series D round was led by Andreessen Horowitz. The deal to acquire HVR Software is valued at $700 million. Fivetran said that it plans to finance the deal with a combination of cash and stock.

Oakland, California-based Fivetran, which received a $5.6 billion valuation in the funding round, operates a cloud service that helps enterprises move data between their information technology systems. A retailer could use Fivetran’s service to send customer purchase logs from an on-premises sales database to a cloud data lake for analysis. Marketing teams can harness the service to sync ad performance data between their campaign monitoring tools.

There are numerous situations where a company requires the ability to transfer information between systems. The importance of transferring information efficiently has created a large market for data integration tools that can make the process of moving records easier, which is part of the reason Fivetran is valued at $5.6 billion. Another reason: The startup says it has more than 2,000 customers, including Autodesk Inc., Square Inc. and other major tech firms.

Fivetran’s cloud service automates many of the tasks normally involved in moving data. Applications and databases often have to be reconfigured before the records they store can be moved to a new location, which frequently requires a significant amount of manual work. Fivetran’s service automates the process to a large extent and creates an encrypted network connection through which records can travel to their destination. The startup’s service optionally enables companies to modify records en route, for example by enriching them with additional data points.

HVR Software, the company Fivetran is acquiring for $700 million, has a similar focus. The company’s software is used to automate the logistics of moving data between enterprise systems and, like Fivetran’s service, can modify the data while it’s being transferred if an organization so requires. HVR Software allows enterprises to keep the source and target systems in sync after the initial data transfer is complete so that any new records added to the source are automatically sent to the target system as well.

Fivetran says HVR Software’s technology is complementary to its own. One of the main reasons Fivetran is buying the company is that it provides an extensive set of features for extracting operational data from mission-critical systems such as Oracle Corp. databases. 

Operational data is the term for the information that an enterprise generates as part of its day-to-day business activities. In the case of a brick-and-mortar retailer, the information generated as part of day-to-day activities might include logs of purchases made at stores. Operational data is highly valuable for analytics projects and, at large enterprises, a sizable portion of this information is kept in the kind of mission-critical systems that HVR Software targets with its products. 

“HVR has spent decades putting together the team and technology to solve the hardest data pipeline problem there is: replicating mission-critical database management systems for the world’s largest enterprises.” Fivetran Chief Executive Officer George Fraser wrote in a blog post.  “These systems contain the most valuable business data, but they’re the hardest to interact with precisely because they are so mission-critical.”

Fivetran says HVR Software’s software will enable customers to more easily analyze information stored in their Oracle Corp. databases, SAP SE enterprise resource planning applications and other key systems. The startup plans to offer the software that it’s acquiring through the deal as a cloud service.

“HVR’s technology can achieve a combination of light footprint, low latency, and high throughput that can’t be found anywhere else,” Fraser wrote.

Fivetran expects to close the acquisition of HVR Software in early October. Including its latest $565 million funding round, the startup has raised more than $728 million from investors to date. 

Image: Fivetran