The oil and gas sector was on the brink of collapse this year amid a devastating decline in commodity prices in the wake of weakened demand as a result of the COVID-19 pandemic.
Oil prices have recovered somewhat, but the industry is still having to reinvent itself in some ways to keep businesses running. Fortunately, energy is one of the sectors that blockchain technology has already begun to disrupt.
Houston-based blockchain startup Data Gumbo just secured $4 million in a Series B funding round that attracted some high-profile backers in the oil space. Saudi Arabian state oil company Saudi Aramco through its Dhahran-based venture subsidiary Saudi Aramco Energy Ventures LLC was a repeat investor in the round. So was Equinor Ventures, the corporate venture arm of Stavanger, Norway-based Equinor. L37 is a new backer.
Data Gumbo CEO and Founder Andrew Bruce told BeInCrypto,
“The total amount is $4M with this first close of our series B, with the round still open. We wanted to move forward to support our strong sales pipeline and demand.”
To date, the Houston-based company has attracted nearly $15 million to its coffers. Bruce spent some time with BeInCrypto to discuss the role of the company’s blockchain, GumboNet, in the oil and gas sector and what it was like to gain the backing of oil giant Saudi Aramco.
Q&A With Data Gumbo Chief Andrew Bruce
BIC: Congratulations on the latest Series B round! Can you tell me what it was like to raise capital in the current global economic climate?
Andrew Bruce: “The current economic environment presented some challenges during our raise earlier this year, with the oil price crash and the global economy shuttered due to COVID-19. We have a strong relationship with both Equinor and Saudi Aramco, as they funded our Series A in 2019. The repeat investments from Equinor and Saudi Aramco show strong, sustained support in Data Gumbo’s offerings, particularly for what industrial smart contracts can do to help companies weather the current climate, as did the new investor, L37.”
BIC: Do you consider the backing of the Saudi Arabian state oil company a stamp of approval for what you are doing?
Andrew Bruce: “The credibility that came with the backing of Equinor and Saudi Aramco was huge. Their support made it acceptable to utilize smart contracts and they provided an additional layer of credibility as customers. With L37 joining as new investors from the California investment community, this further bolsters our story as we expand.”
BIC: Tell me about Data Gumbo’s role in the oil & gas industry. What type of smart contracts are used on the Data Gumbo blockchain?
Andrew Bruce: “Our typical clients are large E&P companies, and their associated supply chain and logistics parties. They use our network to automate the execution of commercial terms that exist within their infrastructure.
“Performance contracts of all kinds; provenance and capital projects are huge EPC spend. Data Gumbo automates commercial transactions by using field operating data pulled into smart contracts, essentially coded natural language contracts that contain pre-agreed terms. The visibility, accuracy and speed of smart contracts alleviate friction to eliminate inefficiencies and cut costs.”
BIC: Is there any interoperability with other blockchains? Will there be an opportunity for financing?
Andrew Bruce: “We have agreements to provide interoperability with other blockchains. At the moment, I’m not sure that this will provide financing. However, it does provide a trusted source of preapproved invoices which can be leveraged with banks.”
BIC: How did Data Gumbo build its blockchain, GumboNet?
Andrew Bruce: “We built our first prototypes on FinTech blockchains but then ran into limitations. We need private blockchains, able to store massive amounts of data “on-chain,” and we needed to be able to create corporate nodes with user roles and tight integrations including associated security with an IoT platform. We did not work with any other blockchain companies to build our network.”
Oil Sector Ripe for Transformation
BIC: How did the collapse in oil prices affect your business?
Andrew Bruce: “The pressure has ultimately been good for us. Data Gumbo can reduce the OPEX of existing oil & gas assets, and at the same time provide real-time visibility into the financial health of companies. This means no more accruals based upon estimates.”
BIC: What is fueling the demand for blockchain technology from the oil and gas sector?
Andrew Bruce: “Energy is stuck operating with legacy processes that rely on manual workflows and paper invoices. The sector is ripe for digital transformation as a way to bring about efficiencies and data-driven insights to make smarter business decisions. Blockchain and smart contracts are an elegant way to bridge and synchronize the disparate accounting and field data systems of the oil industry, accelerating and monetizing the digital transformation.”