Storage Start-Ups in 2015

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
(Source: StorageNewsletter.com)

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

(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)

(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)

* in $ million
(Source: StorageNewsletter.com)

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

* in $ million
(Source: StorageNewsletter.com)

PER ACTIVITY AMONG CURRENT 447 ALIVE START-UPS

(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)

(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

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

WHERE DO 447 CURRENT ALIVE START-UPS COME FROM

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

* in $ million
(Source: StorageNewsletter.com)

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

(Source: StorageNewsletter.com)

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

(Source: StorageNewsletter.com)

ALL 43 FINANCIAL ROUNDS IN 2015

* 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.