DataCore

Storage Start-Ups in 2013

$1.3 billion invested in 57 companies following 58 financial rounds
By Jean-Jacques Maleval on 2014.01.08

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In 2013 we counted 58 investment rounds initiated by 57 storage start-ups, a small number.

It was 77 in 2012 and 66 in 2011, the record being 78 in 2005. This decrease last year 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

start-ups 2013 rounds

 (Source: StorageNewsletter.com)


Fewer New Start-Ups

More worrying is the reduced number of start-ups founded since the heydeys of 2000 when 96 new entities sprang up in a single year. We were only able to turn up 5 new firms launched last year vs. 18 in 2012 and 34 in 2011, while these figures will go up as more of them, operating in stealth mode, come to light.


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

start-ups 2013 year
 (Source: StorageNewsletter.com)


How Much Do They Raise?

21 firms raised more than $20 million in 2013 (27 in 2012 and 16 in 2011). Pure Storage tops the list with with $150 million. Last year the record was $125 million for Box.net. Cloud and SSD were really exciting the investors last year.


LARGEST FINANCIAL ROUNDS IN 2013
(at more than $40 million)

COMPANY $ MILLION
Pure Storage
150
Box 100
Corsair Components
75
SimpliVity 58
Cleversafe* 55*
Skyera
51.6
Actifio 50
Primary Data
50
Crocus Technology
45
Virident Systems
40

*  Correction: Line added on January 9, 2014
(Source: StorageNewsletter.com)

If we take into account here the total funding of start-ups, all rounds aggregated, Pillar Data was historically the most financed company, with about $544 million from Larry Ellison, CEO of Oracle that finally acquires the storage subsystem provider. After that comes Box with $404.5 million, Dropbox with $257 million, Pure Storage with $245 million, and BlueArc (acquired by HDS) with $224 million.

No More Record Year in Financial Funding
2013 was not another record year in the global amount received by storage start-ups considering here only the sums revealed by the companies: $1.291 billion invested. It was $1,432 million in 2012. It's the first time this amount is going down since 2009. But the average amount per round continues to increase, also since 2009, this time by as much as 20% year to year. In brief investors put more money in less start-ups and consequently in less rounds.

These past eleven years, VCs have put $17.2 billion in storage start-ups. This amount is much higher than the total figure in the table below ($10,738 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 $39.7 million in total funding, the average per round being $14.3 million.

  ≠ OF ROUNDS TOTAL
INVESTED*
AVERAGE
PER ROUND*
2003
56 $736 $13.1
2004 77 $980 $12.7
2005
78 $995 $12.8
2006
67 $817 $12.2
2007
65 $744 $11.4
2008
55 $724 $13.2
2009
56 $576 $10.3
2010
69 $861 $12.5
2011
66 $1,224 $18.5
2012 77 $1,432 $18.6
2013 58 $1,291 $22.3
TOTAL
724
$10,378 $14.3

* in $ million
 (Source: StorageNewsletter.com)


Where From?

It will come as a surprise to no one that storage start-ups are for the most part (around three-fourths of the total) headquartered in the U.S., even if occasionally the actual founders hail from another country originally (typically India or Israel). Far behind are UK, France, Canada and Israel. Apart America and Europe, the two other continents, Asia and Oceania, are not well represented at all.

WHICH COUNTRY DO THEY COME FROM?
(out of 409 active start-ups)

COUNTRY
Number
%
USA 298 73%
UK 18 5%
France 17 4%
Canada 12 3%
Israel 9 3%
Others 55 12%
TOTAL 409 100%

 (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. And that's just taking those we know about.

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 27% 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 most companies are seeking, certainly more than the increasingly elusive IPO. Meanwhile, another 18% just vanish off the map - doors closed.

50% 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 794 start-ups)

Became public 26 3%
Sold 221 27%
Closed 147 18%
Remaining start-ups 400 50%

 (Source: StorageNewsletter.com)

11 start-ups did find buyers in 2013 and 21 in 2012, the biggest deal last year being Virident acquired by Western Digital for $685 million. In 2012 it was XtremIO by EMC for $430 million, both of them around SSDs.

There were three IPOs in 2013: Violin Memory now in trouble, Nimble Storage and Barracuda Networks. No one was filed with success in 2012. But this figure last year is not so low and proves that the stock exchange finds some interest in storage when we learned that for all activities in USA (not only IT), there was no more than 82 IPOs in 2013 for total amount of $11.2 billion or an average of $137 million, according to Thomson Reuters & National Venture Capital Association. Average for the three new public storage firms was $135 million.

Few start-ups are going to file for IPO this year. Box is not far to become public. Pure Storage wants do do it. Coraid could be also on the list as well as Tintri in 2015.

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  111.5
JCY International  2011  238  NA
Parade Technologies  2011  34  21.5
Violin Memory 2013 162 186
Nimble Storage 2013 168 98.7
Barracuda Networks 2013 75 40
Average of known figures   120 81.3

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

 

START-UPS ACQUIRED IN 2013

ACQUIRED START-UP BUYER TOTAL FUNDING PRICE*
Arkeia Software (Carlsbad, CA) Western Digital 10 NA
GridIron Systems (Sunnyvale, CA) Violin Memory >20 NA
NexGen Storage (Louisville, CO) Fusion-io 12 119
Nexsan (Thousand Oaks, CA) Imation 40 120
PHD Virtual Technologies (Philadelphia, PA) Unitrends >4 NA
Synerway (Gif-syr-Yvette, France) Noël Minard et Yann Rolland,groupe Resad 3.5 NA
Tonian Systems (Cambrige, MA) Primaty Data (merger) >6 NA
VeloBit (Lincoln, MA) Western Digital NA NA
Virident Systems (Milpitas, CA) Western Digital 116 685
Virsto Software (Sunnyvale, CA) VMware 24 NA
WhipTail Technologies
(Whippany, NJ)
Cisco Systems >41 415

*in $ million
 (Source: StorageNewsletter.com)

 

NEW START-UPS (known thus far) BORN IN 2012 ...

Company Activity and comments
Akonia Holographics (Longmont, CO) holography, disc and drive, founded by former people from InPhase Technologies
BlueData Software
(Mountain View, CA)
big data platform; in stealth mode
CacheIO (Mason, NH) SSD array and cache
Cobalt Iron (Lawrence, KS) enterprise local and cloud backup
DataGravity (Nashua, NH) launched by EqualLogic veterans; in stealth mode
DEY Storage Systems
(San Mateo, CA)
software defined storage: virtualized storage OS on standard hardware for datacenter scale customers
Folio Photonics
(Cleveland, OH)
optical disc holding 1TB or 2TB, spun-off from the Center for Layered Polymeric Systems
Hedvig (Santa Clara, CA) in stealth mode, in software-defined storage system for cloud
hVault (Boulder, CO) holographic disc storage system based on InPhase Technologies' patents
Inktank (Sunnyvale, CA) professional services and support subscriptions around Ceph
Koofr (Ljubljana, Slovenia)
customizable hybrid cloud storage interface
Peaxy (San Jose, CA) storage and management software
PernixData (San Jose, CA) flash virtualization software; series A in 2012
ProphetStor Data Services (Milpitas, CA) Scale-out federation and distributed SAN; founded by former FalconStor and ITRI executives
Qumulo (Seattle, WA) in stealth mode; seed funding of $2.3 million and series A $24.5  million in 2012
Reduxio (Tel Aviv, Israel) software reducing data on SSD/HDD arrays
SageCloud (Boston, MA) storage system for cold storage
Starboard Storage Systems (Broomfield, CO) Unified Hybrid Storage (SSD and HDD); born after the closing of RELDATA; series B in 2012; closed in 2013

 (Source: StorageNewsletter.com)

... AND IN 2013

Company Activity and comments
Datrium Storage alternative to virtualized storage, in stealth mode
Parsec Labs
(Minneapolis, MN)
storage virtualization for NAS
Primary Data merged with Tonian Systems in 2013; in stealth mode; $50 million in 2013 in series B
Seeq (Seattle, WA) big data technologies to manufacturing and operational industrial process data
SoftNAS (Houston, TX) cloud storage OS; private equity funding in 2013

(Source: StorageNewsletter.com)

 

ALL FINANCIAL ROUNDS IN 2013

NAME (HQ) BORN IN 2013 FUNDING TOTAL FUNDING ACTIVITY/COMMENTS
Actifio (Weston, MA) 2009 50 107.5 solution for data protection, DR and BC; two rounds in 2010, $8 and then $16 million
AlephCloud Systems (Sunnyvale, CA) 2011 7.5 9.5 managing content privacy and provenance in public clouds
Atlantis Computing (Mountain View, CA)   20 35 Virtual Desktop Infrastructure (VDI), storage and performance optimization solutions with de-dupe
Axcient
(Mountain View, CA)
2007 17.6 51.1 local backup on an appliance and online backup with DR; raises $7 million and $10.6 million in 2013
BackupAgent
(Delft, The Netherlands)
2005 2 NA online backup solution; investment from the Solid Ventures capital fund; also in Poland; Sars is chief commercial officer; first round in 2007
Bitcasa (Cincinnati, OH) 2011 11 20 infinite online backup storage for desktop PCs
BlueData Software (Mountain View, CA) 2012 15 19 big data platform; in stealth mode
Box (Palo Alto, CA) 2005 100 404.5 online storage on the Web; partners with Dell; two rounds in 2011: $48 million and $81 million
Cleversafe (Chicago, IL)** 2005 55 >100 storage grid
CloudByte (San Mateo, CA) 2010 4 6.1 storage controller to manage physical or virtual storage; engineering team based in Bangalore, India
Cloudfind
(Beehive Yard, UK) Bath, UK)
2011 0.8 1.1 algorithms that automatically tag information and documents from across cloud storage providers
CloudPhysics
(Mountain View, CA)
2011 10  NA datacenter analytics services for virtualized infrastructures
Cloudscaling
(San Mateo, CA)
2006 10  NA OpenStack-powered cloud infrastructure system
CloudVelocity
(Santa Clara, CA)
2010 13 18 hybrid cloud platform with server, networking, security and storage integration with AWS; formerly Denali Systems
Clustrix
(San Francisco, CA)
2006 16.5 46.5 scale-out SQL database engineered for the cloud; founded by former Isilon executives
Coho Data (Sunnyvale, CA) 2011 25 35 formerly Convergent.io; founded by XenSource veterans; in hybrid system with software-defined storage networking
Connected Data
(Santa Clara, CA)
2001 6 6 Transporter to communicate and share files in a peer-to-peer fashion with computers and other Transporter devices located anywhere in the world
Corsair Components
(San Franciso, CA)
1994 75 NA PC components including memory, SSD, flash keys
Crocus Technology (Grenoble, France) 2004 45 116.2 MRAM
DataGravity (Nashua, NH) 2012 30 42 launched by EqualLogic veterans; in stealth mode
Datto (Norwalk, CT) 2007 25 25 hardware- and cloud-based on- and off-site backup, DR and BC solutions
Diablo Technologies (Ottawa, ONT) 2003 7.5 55.5 software and hardware architecture with non-volatile memory for solid state storage for enterprise
Druva Software (Pune, India) 2007 25 42 continuous data availability and de-dupe backup software for laptops
Egnyte (Mountain View, CA) 2007 29.5 64.5 cloud storage (online file server)
EverSpin Technologies (Chandler, AZ) 2008 15 20 MRAM; with roots in Freescale Semiconductor; $20 million in Series A financing and intellectual property from Freescale
GreenBytes
(Providence, RI)
2007 7 NA VDI/desktop virtualization
Hedvig (Santa Clara, CA) 2012 10 12.5 in stealth mode, in software-defined storage system for cloud
Hightail (Campbell, CA) 2004 34 83 online file sharing
HybridCluster (Bristol, UK) 2008 1   storage, replication and web clustering software; a SETsquared company
Infinio (Cambridge, MA) 2011 12 24 software improving storage performance of virtualized environment
Maginatics
(Mountain View, CA)
2010 17 27 software to overlay cloud storage with general-purpose distributed file system accessible by mobile devices
MapR Technologies
(San Jose, CA))
2009 30 59 Distribution for Apache Hadoop for data protection and business continuity; R&D in India; three rounds
Nexenta Systems
(Santa Clara, CA)
2005 24 54 software storage OS based on Linux and ZFS
NextIO (Austin, TX) 2003 8.8 74.8 PCIe I/O virtualization solution; closed doors in 2013
Panzura (San Jose, CA) 2008 25 58 flash-based NAS
PernixData (San Jose, CA) 2012 20 27 flash virtualization software; series A in 2012
PHD Virtual Technologies (Philadelphia, PA) 2006 4 NA backup and recovery for virtual machines: acquired VirtualSharp Software in 2013; acquired by Unitrends in 2013
Piston Cloud Computing (San Francisco, CA) 2011 8 12.5 enterprise OpenStack software
Pivot3 (Austin, TX) 2003 14 114.5 RAID Across Independent Gigabit Ethernet (RAIGE) for video surveillance
Primary Data 2013 50  NA merged with Tonian Systems in 2013; in stealth mode, $50 million in 2013 in series B
Proton Digital Systems
(San Jose, CA)
2011 2 NA flash read channel
Proximal Data
(San Diego, CA)
2011 2 5 virtual cache software for unified I/O caching across multiple VMs
Pure Storage
(Mountain View, CA)
2009 150 245 all-flash storage arrays; on track for IPO in 2013
QuorumLabs (San Jose, CA) 2008 21 31 BC appliance; spun out of Themis Computer in 2008
Radian Memory Systems (Calabasas, CA) 2011 0.7 NA products that will transform the use of storage memory in enterprise and cloud computing environments; in stealth mode; R&D in Russia
Reduxio (Tel Aviv, Israel) 2012 12 12 software reducing data on SSD/HDD arrayse
RunCore Innovation Technology
(Changsha, China)
2007 10 NA rugged SSDs
SageCloud (Boston, MA) 2012 10 NA storage system for cold storage
Seeq (Seattle, WA) 2013 6 6 big data technologies to manufacturing and operational industrial process data
SimpliVity
(Westborough, MA)
2009 58 101 2U box platform to manage virtualized infrastructure; formerly Ecological Solution; two rounds in 2012, $6 million and $18 million?; third one same year series B at $25 million
Skyera (San Jose, CA) 2010 51.6 57.6 all-SSD systems; formerly StorCoud
SolidFire (Boulder, CO) 2010 31 68 all-SSD storage system; two rounds in 2011: $11 million and $25 million
Spanning Cloud Apps (Austin, TX) 2010 6 9 SaaS data protection for Google Apps
SwiftStack
(San Francisco, CA)
2011 6.1 7.6 software-defined storage for object storage; $1.5 million in seed funding and $6.1 million in Series A in 2013
Tegile Systems (Newark, CA) 2009 35  NA multi-protocol SSD/HDD array with de-dupe for primary storage
Virident Systems
(Milpitas, CA)
2006 40 116 enterprise PCIe SSD; also in Bangalore, India: second round in 2010; Seagate puts $40 million in the company in 2013; sold to Western Digital in 2013
Zadara Storage (Irvine, CA) 2011 3 10 software defined storage as a service for public and private clouds (NAS and SAN); also in Nesher, Israel
Zerto (Boston, MA) 2009 13 34.2 hypervisor-based replication for enterprise; also in Herzliya, Israel
Zetta.net (Sunnyvale, CA) 2007 8 39.5 cloud storage solution for enterprises

 Note: Funding in $ million
**  Correction: Line added on January 9, 2014
 (Source: StorageNewsletter.com)

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