Storage Start-Ups in 2016Worst year since 2003
By Jean-Jacques Maleval on 2017.01.10
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
LARGEST FINANCIAL ROUNDS IN 2016
(at $70 million and more)
|Company||in $ million|
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.
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)
* in $ million
TOTAL INVESTED IN START-UPS FROM 2003 TO 2016 ALL ROUNDS INCLUDED
(only for companies releasing total amount invested)
|Number of start-ups||511|
|Average per start-up*||45|
* in $ million
PER ACTIVITY AMONG CURRENT 472 ALIVE START-UPS
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)
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
|Average of known figures||126||106|
* in $ million
** became public via a merger with Network Peripherals
WHERE DO 472 CURRENT ALIVE START-UPS COME FROM
Storage is mainly an US sport.
* Several start-ups were funded in Israel but transferred HQs in USA
HISTORICAL RECORDS IN TOTAL FINANCIAL FUNDING
(more than $200 million, no one in 2016)
|Start-ups||Total financial funding*|
|Pillar Data Systems||544|
* in $ million
12 NEW START-UPS (known thus far) BORN IN 2015
|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|
4 NEW START-UPS (known thus far) BORN IN 2016
|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?|
|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|
|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|
|2002||55||247.4||storage-centric hyper-converged infrastructure|
|2012||32.5||100||data-aware scale-out NAS|
(Palo Alto, CA)
|2014||61||112||scale-out storage architecture for backup|
(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|
(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|
|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
Note: when there are more than one round of financial funding the same year, we add them considering the total as only one round.