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Storage Start-Ups in 2015

Worst year since 2003 in number of financial rounds
By Jean Jacques Maleval on 2016.01.06

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VCs were much more reluctant to invest in storage in 2015. There were only 43 financial rounds during the year, the lowest figure since 2003 (!) for a total amount of no more than $1,4 billion, twice less than the former year. The highest round was $175 million for SimpliVity in 2015, $900 million for Cloudera in 2014.


NUMBER OF FINANCIAL ROUNDS SINCE 2003
startup 2015 rounds
(Source: StorageNewsletter.com)

 

LARGEST FINANCIAL ROUNDS IN 2015
(at $70 million and more)

Company in $ million
SimpliVity 175
Infinidat 150
Tintri 125
Code 42 Software
85
Datto 75
Tegile Systems
70

(Source: StorageNewsletter.com)

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

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

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 6 new firms launched last year vs. 18 in 2014 and 29 in 2012, while these figures will go up as more of them, operating in stealth mode, will come to light. For example, we found only 2 born firms in 2014 at the same time last year, this figure being increased by 16 more entities discovered later.


NUMBER OF STORAGE START-UPS LAUNCHED EACH YEAR SINCE 1997
(when the born year is known)

startups 2015 per year

(Source: StorageNewsletter.com)

2015 Far to Be a Record in Financial Funding
The average amount per round decreases yearly 33%, from $49 million to $33 million.

Investors put less money in fewer start-ups.

These past 13 years, VCs have put $22 billion in storage start-ups. This amount is much higher than the total figure in the table below ($15 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 $44 million in total funding, the average per round being $17 million.

ALL FINANCIAL ROUNDS FROM 2003 TO 2015
(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 77 980  13
2005 79 995  13
2006 67 817  12
2007 67 758  11
2008 57 755  13
2009 58 593  10
2010 69 861  12
2011 70 1,235  18
2012 83 1,449  17
2013 80 1,545  19
2014 56 2,761  49
2015 43 1,435  33
TOTAL 863 14,942 17

* in $ million
(Source: StorageNewsletter.com)

TOTAL INVESTED IN START-UPS FROM 2003 TO 2015 ALL ROUNDS INCLUDED
(only for companies releasing total amount invested)

Total invested* 21,855
Number of start-ups 492
Average per start-up* 44

* in $ million
(Source: StorageNewsletter.com)

PER ACTIVITY AMONG CURRENT 447 ALIVE START-UPS

Activity %
Software 46%
Hardware 28%
SSP 15%
Connection 5%
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 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.

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 873 start-ups)

Became public 30 3%
Sold 247 28%
Closed 159 18%
Remaining start-ups 447 51%

(Source: StorageNewsletter.com)

Eleven start-ups did find buyers in 2015 and 16 in 2014, the biggest deal last year being SolidFire acquired by NetApp for $870 million,  Fusion-io by SanDisk for $1.1 billion two years ago.

There was just one IPO in 2014 (Hortonworks) and 3 in 2015 (Box, Mimecast, Pure Storage). Pure Storage raised $450 million, the highest sum never received by a storage company becoming public. Nutanix is also on the way to enter in the stock exchange. Some other ones could try like like Actifio, Cloudera, DataCore, MapR, Scality, SimpliVity, Tegile and Tintri.

These facts demonstrate that, to get more money to finance the growth of young companies, IPO is today a better way as VCs are disinclined to invest in storage.

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 62.5 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
Box 2015 554.5 175
Mimecast 2015 83 77.5
Pure Storage 2015 470 425
Average of known figures   124 100

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

WHERE DO 447 CURRENT ALIVE START-UPS COME FROM

Countries Number
of start-ups
%
USA 319 71%
France 19 4%
UK 18 4%
Canada 14 3%
Israel 8 2%
India 7 2%
China 6 1%
Switzerland 6 1%
Others 50 11%
Total 447 100%

 

HISTORICAL RECORDS IN TOTAL FINANCIAL FUNDING
(more than $200 million)

Start-ups Total financial funding*
Cloudera 1,041
Box 554,5
Pillar Data Systems 544
Pure Storage 470
Nutanix 312
SimpliVity 276
Tintri 260
Dropbox 257,2
Infinidat 230
BlueArc 224
Actifio 207,5
StorageNetworks 205
Sanrise 203

* in $ million
(Source: StorageNewsletter.com)

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

Company Activity and comments
AccelStor (New Taipei City, Taiwan) all-flash array; spin-off from Innodisk; joint venture between Innodisk (50%), Toshiba and SuperMicro
Datawise.io (San Jose, CA) network and storage solutions for Linux containers
Datos IO (San Jose, CA) distributed versioning platform built for recovery of scale-out databases
E8 Storage (Tel Aviv-Yafo, Israel) in stealth mode; storage architecture for enterprise and software-defined cloud; funding round in December 1, 2014 from Magna VC;
Fractalio Data (Bangalore, India) formerly Datalifecycle company; grid-based storage and information management platform, IntegralStor, that grows from terabytes to petabytes
Iguaz.io (Herzliya, Israel) in stealth mode; data management and storage solutions for big data, IoT and cloud applications soft
infinite io (Austin, TX) network-based storage controller
Kazan Networks (Auburn, CA) NVMe over Fabrics solution for flash connectivity
LifeSite (San Francisco, CA) secure web-based solution for storing all of life's vital information and documents; $4.5 million in early stage funding and then $5 million series A in 2015
Nano-Meta Technologies
(West Lafayette, IN)
plasmonics to advance optical technology; parent company of Photonic Nano-Meta Technologies LLC, Russian Skolkovo-affiliated subsidiary
Revert (Auckland, New Zealand) online backup
Rubrik (Palo Alto, CA) scale-out storage architecture for backup; two rounds in 2015, $10 million anf $41million
StorNetware Systems
(Bangalore, India)
in stealth mode; solution called, Cloud In A Box, Cinabox
TransferSoft (Culver City, CA) HyperTransfer software capable of up to 40Gb/s network bandwidth
Velostrata (San Jose, CA) real-time hybrid cloud solution that streams production workloads to and from the cloud in minutes; R&D in Israel
Xitore (Orange County, CA) new way of solid state storage increasing bandwidth, reducing latency; formerly eXtreme Data Storage; in stealth mode
ZeroStack (Mountain View, CA) scale-out private cloud that converges compute, storage, networking and management services; two rounds in 2015: $5.6 million and then $16 million
ZettaBox (London, UK) cloud storage service in Europe, offices in London and Prague

(Source: StorageNewsletter.com)

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

Company Activity and comments
Datacube.io (France) backup cloud in SaaS mode
FlashGrid (Sunnyvale, CA) open storage software available to Oracle database customers
InterModal Data (Santa Clara, CA) disaggregated storage software solution for enterprise
IzumoBASE (Tokyo, Japan) software-defined storage, investment from Global Brain in 2014
OpenIO (Hern, France) open source object storage solution for massive storage infrastructures; also office in San Francisco
outpace.IO (Winder, GA) like defunct Coraid in storage based on ATA over Ethernet; technical and operational business in Montreuil, France (Alyseo)

(Source: StorageNewsletter.com)

ALL 43 FINANCIAL ROUNDS IN 2015

NAME(HQ) FOUNDED IN 2015 FUNDING* TOTAL FUNDING* ACTIVITY AND COMMENTS
Axcient (Mountain View, CA) 2007 25 76.1 local backup on an appliance and online backup with DR; raises $7 million and $10.6 million in 2013; acquired DirectRestore in 2014
BlueData Software
(Mountain View, CA)
2012 20 39 big data platform
ClearSky Data (Boston, MA) 2013 27 39 storage network simplifying data lifecycle and delivers enterprise storage as a fully managed sevice
CloudEndure (Mill Valley, CA) 2012 7 12.2 real-time replication and recovery of cloud-based applications; also in Ramat Gan, Israel
Cloudistics (Reston, VA) 2013 0.7 0.7 storage acceleration
Code 42 Software (Minneapolis, MN) 2001 85 137.5 offsite and online backup solutions, also in UK
Cohesity (Santa Clara, CA) 2013 55 70 web-scale, converged storage to unify backup, DevOps, and analytics
Coho Data (Palo Allto, CA) 2011 30 67 formerly Convergent.io; founded by XenSource veterans; in hybrid and all-flash system with software-defined storage networking
Crossbar (Santa Clara, CA) 2008 35 85 RRAM non-volatile memory competing with flash and DRAM
Datos IO (San Jose, CA) 2014 15 15 distributed versioning platform built for recovery of scale-out databases
Datto (Norwalk, CT) 2007 75 100 hardware- and cloud-based on- and off-site backup, DR and BC solutions
EverSpin Technologies (Chandler, AZ) 2008 25 45 MRAM; with roots in Freescale Semiconductor; $20 million in series A financing and intellectual property from Freescale
Exablox (Sunnyvale, CA) 2010 23 45.5 cloud managed, scale-out, object-based storage appliance; formerly Oneblox
Hedvig (Santa Clara, CA) 2012 18 30.5 software-defined storage system for cloud
Iguaz.io (Herzliya, Israel) 2014 15 15 in stealth mode; data management and storage solutions for big data, IoT and cloud applications soft
Infinidat (Herzliya, Israel) 2010 150 230 high-end enterprise storage systems; also in Needham, MA
infinite io (Austin, TX) 2014 3.4 NA network-based storage controller
InterModal Data
(Santa Clara, CA)
2015 4 4 disaggregated storage software solution for enterprise
Kaminario (Newton, MA) 2008 15 143 all-flash arrays; R&D in Israel
LifeSite (San Francisco, CA) 2014 9.5 9.5 secure web-based solution for storing all of life's vital information and documents; $4.5 million in early stage funding and then $5 million series A in 2015
Liqid (Lafayette, CO) 2013 5.7 5.7 in stealth mode; Kingston and Phison investors
Nantero (Woburn, MA) 2001 31.5 73 nonvolatile RAM memory; $10.5 million in 2003 in a second round
pCloud (Bulgaria) 2013 3 3 cloud storage provider
Peaxy (San Jose, CA) 2012 15 32 storage and management software
Pivot3 (Austin, TX) 2002 45 171.5 RAID Across Independent Gigabit Ethernet (RAIGE) for video surveillance
Pluribus Networks
(Palo Alto, CA)
2010 50 95 distributed network hypervisor OS, converging compute, network, storage and virtualization
Qumulo (Seattle, WA) 2012 40 66.8 data-aware scale-out NAS; seed funding of $2.3 million and series A $24.5 million in 2012
Revert
(Auckland, New Zealand)
2014 1.2 1.6 online backup
Robin Systems (Milpitas, CA) 2013 15 22 data-centric compute and storage containerization software
Rubrik (Palo Alto, CA) 2014 51 51 scale-out storage architecture for backup; two rounds in 2015, $10 million and $41million
Scale Computing (Indianapolis, IN) 2008 18 61 hyper-converged solutions; $9 million and $17 million rounds in 2010
Scality (San Francisco, CA) 2010 45 80 massively scalable storage platform; spin-off from Bizanga; R&D in Paris; formerly BizangaStore
SimpliVity
(Westborough, MA)
2009 175 276 2U box platform to manage virtualized infrastructure; formerly Ecological Solution
SoftNAS (Houston, TX) 2013 5 6.4 cloud storage OS
SpiderOak (Kansas City, MO) 2007 3.5 3.5 online backup and sharing service
Springpath (Sunnyvale, CA) 2012 25 34 software-defined storage; formerly Storvisor
Tegile Systems (Newark, CA) 2009 70 117.5 multi-protocol SSD/HDD array with de-dupe for primary storage
Tintri (Mountain View, CA) 2008 125 260 purpose-built SSD storage system for virtual machines; two rounds in 2011: $17 million (A,B) and then $18 million (C)
TransferSoft (Culver City, CA) 2014 3 3 HyperTransfer software capable of up to 40Gb/s network bandwidth
Velostrata (San Jose, CA) 2014 14 14 real-time hybrid cloud solution that streams production workloads to and from the cloud in minutes; R&D in Israel
WeTransfer
(Amsterdam, The Netherlands)
2009 25 25 file-transfer service
ZeroStack
(Mountain View, CA)
2014 21.6 21.6 scale-out private cloud that converges compute, storage, networking and management services; two rounds in 2015: $5.6 million and then $16 million
ZettaBox (London, UK) 2014 10 10 cloud storage service in Europe, offices in London and Prague

* 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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