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Storage Start-Ups in 2014

Historical record for just one financial round: $900 million for ...
By Jean-Jacques Maleval on 2015.03.03

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A fact completely dominated the market of storage start-ups in 2014: the monster unique financial round of $900 million received by Cloudera, in in enterprise analytic data management powered by Apache Hadoop. That the highest amount historically for a round in the storage industry. More than that, no start-up ever got more than that in total investment, all rounds included. Last year top round was $150 million for Pure Storage, $100 million for Box in 2013.

Hadoop is one of the most exciting IT technology today, another proof being the successful IPO of Hortonworks in December 2014.

This Clouderra's financing round includes the previously-announced $160 million of funding from T. Rowe Price and three public market investors, Google Ventures, and an affiliate of MSD Capital, L.P., the private investment arm of Michael Dell and his family, and a significant $740 million equity investment by Intel that gives them 18% share of Cloudera.

Also the global sum received by Cloudera up to now, 1,041 million, was never reached by any other start-ups. Former record was $544 million by Pillar Data then acquired by Oracle in 2011.

Of course this exceptional round had a big impact on our comments below for 2014.

In 2014 we counted 55 investment rounds initiated by storage start-ups, a small number.

It was 77 in 2013 and an historicaal record of 80 in 2012. This decrease is not really bad news for storage, still one of the most dynamic sectors in the IT industry, continuing to be appreciated by VCs that dream of what got some of them following the acquisitions of firms like 3par, Data Domain and Isilon few years ago at more than $2 billion, or few successful IPOs.

But the investors in these latter three start-ups were lucky as generally most of them have to invest in several new ventures to finally win the jackpot.

NUMBER OF FINANCIAL ROUNDS SINCE 2003

Number rounds since 2003(Source: StorageNewsletter.com)

Fewer New Start-Ups
More worrying is the reduced number of start-ups founded since the heydeys of 2000 when 97 new entities sprang up in a single year. We were only able to turn up 2 new firms launched last year vs. 20 in 2013 and 25 in 2012, while these figures will go up as more of them, operating in stealth mode, will come to light.

For example, we found 5 born in 2013 at the same time last year, this figure being increased by 15 discovered later.


NUMBER OF STORAGE START-UPS LAUNCHED EACH YEAR SINCE 1996
(when the born year is known)

strat-ups each year(Source: StorageNewsletter.com)


How Much Do They Raise?

The number of financial rounds in 2014, 55, represented the lowest number since 2003, but some were impressive (see below), with big winner Cloudera but also Pure Storage and Nutanix at more than $200 million. Note that Pure Storage got in fact $225 million and $60 million in secondary funding deal in 2014. Nutanix also  received two rounds in 2014, $101 million and $140 million.


LARGEST FINANCIAL ROUNDS IN 2014
(at $70 million and more)

Company in $million
Cloudera 900
Pure Storage* 285
Nutanix* 241
Box 150
MapR Technologies 110
Actifio 100
Hortonworks 100
SolidFire 82
Tintri 75
Spin Transfer Technologies 70

 

 

 

 

 

 

 

 

 

 

 

* in two rounds
(Source: StorageNewsletter.com)

Record Year in Financial Funding
2014 was not another record year in the global amount received by storage start-ups considering here only the sums revealed by the companies: $2,660 billion invested, compared to $1,526 billion in 2013 or up 74% . In parallel, the average amount per round continues to increase, also since 2009, reaching , but here booming yearly 164%.

But these impressive growing figures are the resuts of the exceptional $900 million round of Cloudera.Without it, 2014 lobal amount received by storage start-ups will be up only 15%  and average amount per round $35 million up 78%.

Investors put more money in fewer start-ups and consequently in fewer rounds, like in 2013.

These past twelve years, VCs have put $17.8 billion in storage start-ups. This amount is much higher than the total figure in the table below ($13.5 billion adding all rounds) because, for several firms, we got the total invested but not the details per round.

On average, a company got historically $38.4 million in total funding, the average per round being $18.5 million.

* in $ million
(Source: StorageNewsletter.com)

The activity more appreciated  by VCs in 2014 were Haddop, software-defined storage, SSD systems and hyperconverged insfrastructure.

PER ACTIVITY AMONG CURRENT ALIVE START-UPS

Activity %
Software 45%
Hardware 28%
SSP 16%
Connection0 6%
Fundamental technology 4%
Security 2%
TOTAL 100%

(Source: StorageNewsletter.com)

Where Are They Going?
The last thing we looked at was what becomes of all these storage start-ups after we identify and count them. The conclusion is not really reassuring, a reminder that investment in these sorts of companies is in fact highly risky.

On all start-ups identified, only 3% eventually go public, and thus allow investors more than just to recoup their original stake. The same is generally true for the 28% that find buyers, although the asking price is not always greater than the total of all sunk investments. It is, in any case, the emergency exit that many companies are seeking. Meanwhile, another 19% just vanish off the map - doors closed.

50% of all start-ups of them remain in a holding pattern, still a start-up, still nursing the secret hope of an offer from a storage giant seeking to fill-in a missing technology.

WHAT HAPPENED TO THEM SINCE 1978
(out of a total 846 start-ups)

Became public 28 3%
Sold 238 28%
Closed 158 19%
Remaining start-ups 423 50%
TOTAL 847 100%

(Source: StorageNewsletter.com)

16 start-ups did find buyers in 2014 and 11 in 2013, the biggest deal last year being Fusion-io acquired by SanDisk for $1.1 billion aand Virident by Western Digital for $685 million two years ago

There was only one IPO in 2014 (3 in 2013): Hortonworks, getting $163 million after $110 million invested in the company. The stock exchange does not find big interest in storage

Few start-ups are going to file for IPO this year. Box already did it. Somes names are rumored: Actifio, Nutanix, Pure Storage, Tintri or SolidFire.

IPOs IN STORAGE INDUSTRY

Company IPO year Amount raised* Total funding*
Silicon Storage Technology
1995 15 NA
StorageNetworks 2000 260 205
BakBone 2000 NA NA
McData 2000 350 NA
STEC 2000 65 NA
FalconStor** 2001 NA 33
Xyratex 2004 48 NA
Rackable Systems 2005 75 21
CommVault 2006 161 75
Double-Take 2006 55 70
Isilon 2006 108 69
Riverbed 2006 86 38
3PAR 2007 95 183
Compellent 2007 85 53
Data Domain 2007 111 41
Mellanox 2007 102 89
Netezza 2007 124 68
Voltaire 2007 47 75
Rackspace Hostings 2008 145 NA
OCZ Technology 2010 101 NA
Carbonite 2011 62.5 67
Fusion-io 2011 223 112
JCY International 2011 238 NA
Parade Technologies 2011 34 21.5
Violin Memory 2013 162 186
Nimble Storage 2013 168 99
Barracuda Networks 2013 75 40
Hortonworks 2014 110 173
Average of known figures   117 85.0

* in $ million
** became public via a merger with Network Peripherals
(Source: StorageNewsletter.com)

 

NEW START-UPS (known thus far) BORN IN 2013

Company Activity and comments
ClearSky Data (Boston, MA) in stealth mode
Cloud Guys (Ville d'Avray, France) Lima appliance for personal cloud storage
CNEX Labs (San Jose, CA) in stealth mode; apparently in PCIe NVMe for SSD
Cohesity (Santa Clara, CA) in stealh mode
Datrium Storage alternative to virtualized storage, in stealth mode
Elastifile (San Jose, CA) software-defined storage solution for all-flash, distributed file, object, and block store and serving as enterprise scale out primary storage; also in Herzliya, Israel
Igneous Systems (Seattle, WA) builds, maintains and scales enterprise data center infrastructures; in stealth mode
Long Access (Athens, Greece) secure personal cloud archiving
Nextbit Systems (San Francisco, CA) mobile data backup and sync technology
NVMdurance (Limerick, Ireland) software for NAND flash endurance; also in San Jose, CA
NxGn Data (Irvine, CA) SSDs based on own controller
Parsec Labs (Minneapolis, MN) storage virtualization for NAS
Primary Data (Palo Alto, CA) software-defined storage; merged with Tonian Systems in 2013; in stealth mode; office in Israel
Quobyte (Boston, MA) software-defined storage system running on commodity Linux servers; R&D in Berlin Germany; seven-figure Euro financing in 2014
Seeq (Seattle, WA) big data technologies to manufacturing and operational industrial process data
SoftNAS (Houston, TX) cloud storage OS
Stratoscale (Herzliya Pituach, Israel) hyper convergence virtualization compute and storage software; probably born in 2013
StreamNation (Lëtzebuerg, Luxembourg) photo and viedo online backup; acquired Picturelife in 2015
ThinAir Labs (Palo Alto, CA) programmable virtual storage platform; in stealth mode
Verselus (Pleasanton, CA) HDD and SSD manufacturing processes; several employees coming from Xyratex

(Source: StorageNewsletter.com)

NEW START-UPS (known thus far) BORN IN 2014

Company Activity and comments
Nano-Meta Technologies (West Lafayette, IN) plasmonics to advance optical technology; parent company of Photonic Nano-Meta Technologies LLC, Russian Skolkovo-affiliated subsidiary
Xitore (Orange County, CA) new way of solid state storage increasing bandwidth, reducing latency; formerly eXtreme Data Storage; in stealth mode

(Source: StorageNewsletter.com)

ALL 55 FINANCIAL ROUNDS IN 2014

NAME (HQ) BORN IN 2014 FUNDING TOTAL FUNDING ACTIVITY/COMMENTS
Actifio (Weston, MA) 2009 100 207.5 solution for data protection, DR and BC
Amplidata (Lochristi, Belgium) 2008 21 43 RAID by storing data across a selection of disks; also in Milpiltas, CA; two rounds in 2010, $2.5 million and then $6 million; $11 million round in 2014 and $10 million investment of Western Digital Capital
Avere Systems (Pittsburgh, PA) 2008 20 72 tiered NAS appliances
Box (Palo Alto, CA) 2005 150 554.5 online storage on the Web; partners with Dell; files IPO in 2015 getting $175 million
ClearSky Data (Boston, MA) 2013 12 12 in stealth mode
Cloud Guys (Ville d'Avray, France) 2013 2.5 3.7 Lima appliance for personal cloud storage
Cloudera (Palo Alto, CA) 2008 900 1,041 Apache Hadoop-based platform
Cloudian (Foster City, CA) 24 44 cloud storage platform; formerly Gemini Mobile Technlologies
CloudPhysics (Mountain View, CA) 2011 15 27.5 datacenter analytics services for virtualized infrastructures
CNEX Labs (San Jose, CA) 2013 37 37 in stealth mode; apparently in PCIe NVMe for SSD
Crossbar (Santa Clara, CA) 2008 25 50 RRAM non-volatile memory competing with flash and DRAM
CTERA Networks (Petach Tikva, Israel) 2008 25 45 Cloud Attached Storage grouping small NAS into single appliance; also in NYC
DataGravity (Nashua, NH) 2012 50 92 data-aware storage platform that tracks data access and analyzes data; launched by EqualLogic veterans
DigitalOcean (New York, NY) 2011 37.2 40.4 SSD powered cloud
Druva Software (Pune, India) 2007 25 67 continuous data availability and de-dupe backup software for laptops
Elastifile (San Jose, CA) 2013 8 8 software-defined storage solution for all-flash, distributed file, object, and block store and sering as enterprise scale out primary storage; also in Herzliya, Israel
Evtron (St. Louis, MO) 2012 0.8 1.5 high-density storage platform
Formation Data Systems (Fremont, CA) 2012 c 24.2 software for enterprise converged platform
Gridstore (Mountain View, CA) 2007 11 26 NAS grid solution; originated in Dublin, Ireland
Hive Cloiud (San Francisco, CA) 0.5 0.5 social network for file sharing; born in 2014?
Hortonworks (Palo Alto, CA) 2011 100 NA develops, distributes and supports open source Apache Hadoop data platform; acquired XA Secure in 2014
Igneous Systems (Seattle, WA) 2013 23.6 26.6 build, maintain and scale enterprise data center infrastructures; in stealth mode
Infrascale (El Secundo, CA) 2006 16.3 29.3 cloud backup and archive, disaster recovery, and file sharing with military-grade security; acquired Eversync in 2014
ioSafe (Auburn, CA) 2005 2.5 NA fire resistant and waterproof D2D backup appliance
IzumoBASE (Tokyo, Japan) 2012 1.4 NA software-defined storage, investment from Global Brain in 2014
Kaminario (Newton, MA) 2008 53 143 all-flash arrays; R&D in Israel
Load DynamiX (Santa Clara, CA) 2008 12 NA storage infrastructure performance validation; formerly SwiftTest
Long Access (Athens, Greece) 2013 0.36 0.51 secure personal cloud archiving
MapR Technologies (San Jose, CA)) 2009 110 169 distribution for Apache Hadoop for data protection and business continuity; R&D in India
Maxta (Sunnyvale, CA) 2009 25 35 Software defined storage platform
Memblaze Technology (Beiijng , China) 2010 20 NA SSDs
Nasuni (Natick, MA) 2009 10 53 secure cloud storage; founded by former executives of Archivas
nCrypted Cloud (Boston, MA) 2012 5 NA secure cloud storage
Nextbit Systems (San Francisco, CA) 2013 18 18 mobile data backup and sync technology
Numvision (Paris, France) 2009 0.5 NA software to sync files on cloud; financial round in 2013
Nutanix (Santa Clara, CA) 2009 241 312 cloud computing and virtualization
NVMdurance (Limerick, Ireland) 2013 0.8 1.1 software for NAND flash endurance; also in San Jose, CA
Odysee (San Francisco, CA) 2011 0.75 NA online storage of videos and photos
ownCloud (Lexington, MA) 2011 6.3 3.75 open source file sharing
Pivot3 (Austin, TX) 2003 12 126.5 RAID Across Independent Gigabit Ethernet (RAIGE) for video surveillance
Pluribus Networks (Palo Alto, CA) 2010 35 95 distributed network hypervisor OS, converging compute, network, storage and virtualization
Primary Data (Palo Alto, CA) 2013 13 NA software-defined storage; merged with Tonian Systems in 2013; in stealth mode; office in Israel
Pure Storage (Mountain View, CA) 2009 285 470 all-flash storage arrays
Reduxio (San Bruno, CA) 2012 15 27 enterprise hybrid storage with 1-second data recovery, in-line in-memory deduplication and compression and block-level tiering; also in Petach Tikvah, Israel
RzoFS (Fizians SAS) (Nantes, France) 2010 1 NA software scale-out NAS file system
SolidFire (Boulder, CO) 2010 82 150 all-SSD storage system
Sonian (Dedham, MA) 2006 8 36.2 SaaS hosted archive solution with grid computing infrastructure technologies; acquired Webroot's email archiving business in 2012
Spin Transfer Technologies (Boston, MA) 2007 70 106 orthogonal spin transfer magnetoresistive random access memory technology; subsidiary of Allied Minds
StarWind Software (Wakefield, MA) 2003 3.25 6.25 iSCSI SAN and storage virtualization software; spin-off from Rocket Division
Storage Made Easy (Sutton, UK) 2008 1 2.5 secure private enterprise file sharing and synchronization; wholly-owned by Vehera Ltd.; formerly SMEStorage
Stratoscale (Herzliya Pituach, Israel) 2013 32 42 hyper convergence virtualization compute and storage software; probably born in 2013
Streem (San Francisco, CA) 0.875 NA unlimited cloud storage and media streaming service; Y Combinator
SwiftStack (San Francisco, CA) 2011 16 23.6 software-defined storage for object storage
Tintri (Mountain View, CA) 2008 75 135 purpose-built SSD storage system for virtual machines
Zerto (Boston, MA) 2009 26 60.2 hypervisor-based replication for enterprise; also in Herzliya, Israel

Note: Funding in $ million
(Source: StorageNewsletter.com)

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