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Storage Start-Ups in 2016

Worst year since 2003
By Jean-Jacques Maleval on 2017.01.10

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2016 was globally the worst year for start-ups. VCs were much more reluctant to invest in storage. There were only 36 financial rounds during the year, the lowest figure since 2003 (!) for a total amount of only $907 million, the lowest amount since 2011, about twice less than the former year. The highest round was $77 million for Upthere in 2016, $175 million for Simplivity in 2015, and $900 million for Cloudera in 2014.


NUMBER OF FINANCIAL ROUNDS FROM 2003 TO 2016

start - up 2016 each round per year
 (Source: StorageNewsletter.com)

LARGEST FINANCIAL ROUNDS IN 2016
(at $70 million and more)

Company in $ million
Upthere 77
Zerto 70
Rubrik
61
Datrium
55
Pivot3 55
Druva Software
51
Elastifile 50
MapR 50

(Source: StorageNewsletter.com)

Why?
The worldwide storage market is no more growing and then not a good opportunity for investors.
Furthermore the more popular technologies attracting users (SSDs, all-flash systems, software-defined storage, scale-out NAS, hyperconverged platform, cloud storage), there are already too many competitors including about all storage giants.

There is currently about no killer technology that could convince VCs, just improvements.

Fewer New Start-Ups
Also 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 4 new firms launched last year vs. 13 in 2015 and 23 in 2014, while these figures will go up as more of them, operating in stealth mode, will come to light. For example, we found only 6 born firms in 2015 at the same time last year, this figure being increased by 7 more entities discovered later.


NUMBER OF STORAGE START-UPS LAUNCHED EACH YEAR SINCE 1996
(when the born year is known)
start up der 2016

(Source: StorageNewsletter.com)

2016 Far to Be a Record in Financial Funding
The average amount per round decreases yearly 17%, from $30 million to $25 million.

Investors put less money in fewer start-ups.

These past 14 years, VCs have put $23 billion in storage start-ups. This amount is much higher than the total figure in the table below ($16 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 $45 million in total funding, the average per round being $18 million.

ALL FINANCIAL ROUNDS FROM 2003 TO 2016
(only for start-ups releasing the amount of their financial rounds)

Year Number
of rounds
Total
invested*
Average
per round*
2003 57 759  13
2004 78 990  13
2005 80 1,004  13
2006 68 818  12
2007 68 789  12
2008 58 818  14
2009 59 591  10
2010 69 865  13
2011 70 1,235  18
2012 85 1,459  17
2013 83 1,579  19
2014 64 2,854  45
2015 58 1,717  30
2016 36 907 25
TOTAL 933 16,385 18

* in $ million
(Source: StorageNewsletter.com)

TOTAL INVESTED IN START-UPS FROM 2003 TO 2016 ALL ROUNDS INCLUDED
(only for companies releasing total amount invested)

Total invested* 23,048
Number of start-ups 511
Average per start-up* 45

* in $ million
(Source: StorageNewsletter.com)

PER ACTIVITY AMONG CURRENT 472 ALIVE START-UPS

Activity %
Software 52%
Hardware 30%
SSP 16%
Connection 6%
Fundamental technology 4%
Security 1%
TOTAL 100%

(Source: StorageNewsletter.com)

Where Are They Going?
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 generally 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 18% just vanish off the map - doors closed.

51% 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 910 start-ups)

Became public 33 3%
Sold 246 28%
Closed 159 18%
Remaining start-ups 472 51%

(Source: StorageNewsletter.com)

Only two start-ups did find buyers in 2016 and 13 in 2015, the biggest deal last year being SolidFire acquired by NetApp for $870 million. The acquisitions  last year: Initio by Sage Microelectronics and NexGen Storage by Pivot3 for unknown price.

There was just 4 IPOs in 2015 and 2 in 2016 (EverSpin Technologies raising $40 million and Nutanix getting $238 million after $370 million in total financial funding). Pure Storage raised $450 million in 2014 and Box $554 million in 2015, the highest sum never received by a storage company becoming public. Acronis is on the way to enter into the stock exchange and some other ones could try like like DataCore, Kaminario, MapR, Scality, SimpliVity, Tegile and Tintri.

These facts demonstrate that, to get more money to finance the growth of young companies, IPO seems today a better way than an acquisition.

31 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 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
Adesto Technologies 2015 22 54
Box 2015 554 175
Mimecast 2015 83 77.5
Pure Storage 2015 470 425
EverSpin Technologies 2016 40 45
Nutanix 2016 238 370
Average of known figures   126 106

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

WHERE DO 472 CURRENT ALIVE START-UPS COME FROM
Storage is mainly an US sport.

Countries Number
of start-ups
%
USA 336 71%
France 20 4%
UK 20 4%
Canada 15 3%
Israel* 13 3%
India 7 1%
Australia 6 1%
China 6 1%
Switzerland 6 1%
Others 43 9%
Total 472 100%

 * Several start-ups were funded in Israel but transferred HQs in USA
(Source: StorageNewsletter.com)

HISTORICAL RECORDS IN TOTAL FINANCIAL FUNDING
(more than $200 million, no one in 2016)

Start-ups Total financial funding*
Cloudera 1,041
Box 554
Pillar Data Systems 544
Pure Storage 470
Nutanix 370
SimpliVity 276
Tintri 260
Dropbox 257
Pivot3 247
Infinidat 230
BlueArc 224
Actifio 207
StorageNetworks 205
Sanrise 203

* in $ million
(Source: StorageNewsletter.com)

12 NEW START-UPS (known thus far) BORN IN 2015

COMPANY (HQ)
ACTIVITY
Alluxio (San Francisco, CA) memory-centric distributed storage system; formerly Tachyon Nexus
Datacube.io (France) backup cloud in SaaS mode
FADU (Seoul, Korea) NVMe SSDs
FlashGrid (Sunnyvale, CA) open storage software for Oracle database customers
HoneycombData (Santa Clara, CA) scale-out all-flash and hybrid arrays
HubStor (Kanata, ONT, Canada) data-aware cloud archive
InterModal Data (Santa Clara, CA) disaggregated storage software solution for enterprise; closed in 2016
IzumoBASE (Tokyo, Japan) software-defined storage
OmniTier (Santa Clara, CA) tiered memory architecture utilizing NVMe SSDs and small amounts of DRAM
OpenIO (Hern, France) open source object storage solution for massive storage infrastructures
outpace.IO (Winder, GA) like defunct Coraid in storage based on ATA over Ethernet; technical and operational business in Montreuil, France (Alyseo)
StorageOS (London, UK) low entry point, full enterprise functionality storage array integrated with VMWare, Docker, AWS, and Google Cloud

(Source: StorageNewsletter.com)

 

4 NEW START-UPS (known thus far) BORN IN 2016

COMPANY (HQ) ACTIVITY
BlueArchive (Boston, MA) in stealth mode; successor of Storiant in software for cold storage?
Envemio (Laguna Niguel, CA) I/O Internet controller cards, then for IB and FC
Nextcloud (Stuttgart, Germany) open source file sync and share
Simply (Los Angeles, CA) high-speed storage solutions for media professionals

 

ALL 36 FINANCIAL ROUNDS IN 2016

COMPANY (HQ) BORN IN INVESTMENT IN 2016* TOTAL INVESTMENT* ACTIVITY
Avalanche Technology (Fremont, CA) 2006 23 NA low power non-volatile magnetic memory
Blue Medora (Grand Rapids, MI) 2007 8.6 14.5 software solutions that tie data from virtualized and cloud-based databases, applications and services with compute, storage and network infrastructure to create unified view of infrastructure
BlueArchive (Boston, MA) 2016 1.94 NA in stealth mode; successor of Storiant in software for cold storage?
Caringo
(Austin, TX)
2005 8.8 33 Swarm object storage software
CloudEndure (New York, NY) 2012 6 18.2 live-migration and DR solutions; also in Ramat Gan, Israel
Cloudian (San Mateo, CA) 2001 41 79 hybrid cloud storage platform; formerly Gemini Mobile Technlologies
Cloudistics (Reston, VA) 2013 15 15.7 software-defined application cloud platform, natively converging network, storage, compute, virtualization and management
Cozy Cloud (Puteaux, France) 2012 4.5 5.6 secure personal cloud to store, sync, and share data
CTERA Networks (Petach Tikva, Israel) 2008 20 70 Cloud Attached Storage grouping small NAS into single appliance
Datrium (Sunnyvale ,CA) 2013 55 110 server-flash storage system
Diablo Technologies (Ottawa, ONT) 2003 37 95.8 software and hardware architecture with non-volatile memory for solid state storage for enterprise
Diamanti (San Jose, CA) 2014 12.5 NA network and storage solutions for Linux containers; formerly Datawise.io
DriveScale (Sunnyvale, CA) 2013 15 15 Composable infrastructure platform that makes commodity servers and storage flexible and responsive in scale-out deployments
Druva Software (Pune, India) 2007 51 118 continuous data availability and de-dupe backup software for laptops
E8 Storage (Santa Clara, CA) 2014 12 17 centralized NVMe enterprise all-flash solution, R&D in Tel Aviv, Israel
Elastifile (San Jose, CA) 2013 50 58 software-defined storage solution for all-flash, distributed file, object, and block store and serveing as enterprise scale out primary storage; also in Herzliya, Israel
HoneycombData (Santa Clara, CA) 2015 18.5 27 scale-out all-flash and hybrid arrays
HyperGrid (Mountain View, CA) 2007 19 45 hyper-converged all flash infrastructure; originated in Dublin, Ireland; formerly Gridstore; named change in 2016 following merger with DCHQ
Kazan Networks (Auburn, CA) 2014 4.5 NA NVMe over Fabrics solution for flash connectivity
Mangstor (Austin, TX) 2011 5 25 PCIe flash controller
MapR Technologies (San Jose, CA)) 2009 50 194 Distribution for Apache Hadoop for data protection and business continuity
Nantero (Woburn, MA) 2001 21 110 nonvolatile RAM memory
Nasuni
(Natick, MA)
2009 25 80.5 secure cloud storage; founded by former executives of Archivas
NVMdurance (Limerick, Ireland) 2013 2.5 2.77 software for NAND flash endurance; also in San Jose, CA
NVXL Technology (Fremont, CA) 1999 2.5 NA non-volatile storage product incorporating NVMdurance software; also in Dublin, Ireland
OwnBackup (Fort Lee, NJ) 2012 3.5 3.5 backup and restore ISV on the Salesforce.com AppExchange; also in Israel
Pivot3
(Austin, TX)
2002 55 247.4 storage-centric hyper-converged infrastructure
Qumulo
(Seattle, WA)
2012 32.5 100 data-aware scale-out NAS
Rubrik
(Palo Alto, CA)
2014 61 112 scale-out storage architecture for backup
Scality
(San Francisco, CA)
2010 12 92 massively scalable storage platform; spin-off from Bizanga; R&D in Paris; formerly BizangaStore; investment of HPE in 2016, probably around $10million
Stratoscale (Herzliya Pituach, Israel) 2013 27 70 hyper convergence virtualization compute and storage software
Upthere (Redwood City, CA) 2011 77 NA cloud personal storage
Velostrata (San Mateo, CA) 2014 17.5 31.5 real-time hybrid cloud solution that streams production workloads to and from the cloud in minutes; R&D in Israel
Virtual Instruments (San Jose, CA) 2008 20 85.5 virtual infrastructure optimization solutions; spin-out from Finisar; merged with Load Dynamix in 2016 with new $20 million investment
Weka.IO
(Tel Aviv, Israel)
2013 22.5 32.5 software-defined storage scales storage to hundreds of petabytes, tens of millions of IO/s, sub milliseconds latency
Zerto
(Boston, MA)
2009 70 130 hypervisor-based replication for enterprise; also in Herzliya, Israel, $50 million and then additional $20 million in series E in 2016

* in $ million
(Source: StorageNewsletter.com)

Note: when there are more than one round of financial funding the same year, we add them considering the total as only one round.

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