Nutanix Adds $25 Million in Series B Round

Nutanix, Inc. announced $25 million in new funding in a Series B round led by venture capital firm Khosla Ventures.

Existing investors, Lightspeed Venture Partners and Blumberg Capital, are also participating in this investment round.

The company is one of the first to be funded from Khosla Ventures new $1.05 billion fund, Khosla Ventures IV. The new fund will further the firm’s strategy to invest in early stage investments in the areas of clean tech, IT, mobile, and Internet technology.

"When I was at Sun Microsystems, the focus was on decoupling the client and the server over a physical network. In the 30 years since then, the clock has turned full circle," said Vinod Khosla, founder of Khosla Ventures. "Virtualization has made it possible to run clients and (storage) servers in the same hardware. Network storage, as we know it, is ready to be radically disrupted. Datacenters will be dramatically faster, simpler and greener with Nutanix."

Nutanix is attracting attention from blue chip VC firms in part because its unconventional virtualization architecture disrupts decades of traditional network storage dominance in datacenters. Shirish Sathaye, general partner of Khosla Ventures, and Mark Leslie, former chairman and CEO of Veritas Software and a Nutanix advisor, will join the Nutanix board of directors.

"It’s hard to think of a legacy technology that’s more deserving of disruption than SANs—they are expensive and inflexible, and they prevent enterprises from fully realizing their virtualized datacenter potential for initiatives such as private cloud and desktop virtualization," said Sathaye. "By taking the SAN out of the equation, Nutanix brings completely fresh thinking to solving virtualization challenges. They have a tremendous business opportunity in front of them."

Nutanix’s over-subscribed Series B round of funding follows the company’s August launch of its product, Nutanix Complete Cluster, a high-performance hardware and software solution that converges compute and storage into a single, compact building block for scaling out a virtualized datacenter. The product’s simple approach attracts industry attention and winning Best of VMWorld 2011 (for desktop virtualization) during its first public appearance. Nutanix is seeing interest in its disruptive solution from mid to large enterprise customers and plans to use this funding to grow its market presence in domestic and international markets.

"We made our first investment in Nutanix while they were still developing a product. The company’s trajectory reminds me of my experience in the early days of Riverbed Technology," said Ravi Mhatre, Nutanix board member and founder of Lightspeed Ventures. "I see Nutanix poised for the same type of rapid growth, leveraging a channel-driven business model to capitalize on a huge market opportunity."

Formerly a member of the boards of VMware and NetApp, Mark Leslie has seen the changes that virtualization has created in the storage industry over the last decade. "The converged compute and storage architecture that Nutanix brings to the table has the potential to completely makeover the face of virtualized datacenters," said Leslie. "They are setting a new standard for a private cloud that gives IT dramatically reduced cost of ownership with the simplicity of a compact building block that can rapidly scale out capacity and performance at the pace that businesses require today."