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ANALYSIS: Storage Start-Ups in 2017

VCs investing 34% more than in 2016
By Jean Jacques Maleval on 2018.02.01

2017 was a little better than 2016 for storage start-ups. VCs were less reluctant to invest in storage. There were 46 financial rounds last year compared to 43 in 2016, that was the lowest figure since 2009, for a total amount of $1,256 million up 34% Y/Y.

The highest round was $180 million for Rubrik, $77 million for Upthere in 2016, $175 million for Simplivity in 2015, and $900 million for Cloudera in 2014.

NUMBER OF FINANCIAL ROUNDS FROM 1996 TO 2017

 

 

 

 

 

 

 

 

 

 

 

(Source: StorageNewsletter.com)

LARGEST FINANCIAL ROUNDS IN 2017
(at $50 million and more)

Company in $ million
Rubrik 180
Infinidat 95
Cohesity
90
Druva
80
Oodrive 69
MapR 56
Vexata
54

(Source: StorageNewsletter.com)

There was 7 rounds at more than $50 million last year and 8 in 2016. Rubrik was n°3 in 2016 with $61 million with now a total at $292 million. Kaminario also surpasses $200 million in 2017 in total funding with $218 million.

Why only a little better in 2017?
The worldwide storage market is no more growing and then not a real 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.

Furthermore, there is currently about no new killer technology that could convince VCs, just improvements.

More 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 2 new firms launched last year vs. 13 in 2016, 19 in 2015 and 25 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 4 born firms in 2016 at the same time last year, this figure being increased by 9 more entities discovered later.

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

 

 

 

 

 

 

 

 

 

(Source: StorageNewsletter.com)

2017 Good Year in Financial Funding
The average amount per round increases yearly 23%, from $22 million to $27 million.

Investors put more money in more start-ups.

These past 14 years, VCs have put $24.8 billion in storage start-ups. This amount is much higher than the total figure in the table below ($17.8 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 $46 million in total funding, the average per round being $18 million.

ALL FINANCIAL ROUNDS FROM 2003 TO 2017
(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 78 990 13
2005 80 1,004 13
2006 68 818 12
2007 68 789 12
2008 58 818 14
2009 59 591 10
2010 69 865 13
2011 70 1,235 18
2012 88 1,499 17
2013 86 1,635 19
2014 66 2,882 44
2015 62 1,741 28
2016 43 937 22
2017 46 1,256 27
TOTAL 998 17,819 18

* in $ million
(Source: StorageNewsletter.com)

TOTAL INVESTED IN START-UPS FROM 2003 TO 2017 ALL ROUNDS INCLUDED
(only for companies releasing total amount invested)

Total invested* 24,811
Number of start-ups 534
Average per start-up* 46

* in $ million
(Source: StorageNewsletter.com)

PER ACTIVITY AMONG CURRENT 527 ALIVE START-UPS

Activity Number %
Software 249 47%
Hardware 143 27%
SSP, cloud
81 15%
Connection 28 5%
Fundamental technology 19 4%
Security 7 1%
TOTAL 527 100%

(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 4% 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.

52% of all alive start-ups 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 950 start-ups)

Became public 34 4%
Sold 267 28%
Closed 170 18%
Remaining start-ups 490 52%

NB: Total here is 961 - and not 950 - because 11 firms became public AND/OR were sold AND/OR were closed.
(Source: StorageNewsletter.com)

18 two start-ups did find buyers or merged in 2017, 4 in 2016 and 13 in 2015, the biggest deal last year being Barracuda Networks sold to Thoma Bravo for $1.6 billion. Record in 2016 was SolidFire acquired by NetApp for $870 million. HPE was an avid acquirer in 2017, buying Nimble Storage for $1.09 billion and SimpliVity for $650 million.

 

There was just 4 IPOs in 2015 and 2 in 2016 (EverSpin Technologies and Nutanix) and 2 in 2017: Cloudera raising $225 million and Tintri $60 million, much less than total financial funding, $1.04 billion and $260 million respectively. Pure Storage raised $450 million in 2014 and Box $554 million in 2015, the highest sum never received by a storage company becoming public. Here are some start-ups eventually able to enter into the stock exchange: Acronis, Dropbox, DataCore, Exagrid, Infinidat, Kaminario, MapR, Nasuni, Rubrik, Scality, Veeam.

These facts demonstrate that, to get more money to finance the growth of young companies, IPO seems today a better way than an acquisition.

35 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 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
Adesto Technologies 2015 22 54
Box 2015 554 175
Mimecast 2015 83 77.5
Pure Storage 2015 470 425
EverSpin Technologies 2016 40 45
Nutanix 2016 238 370
Tintri 2017 60 260
Cloudera 2017 225 1,041
Average of known figures   140 140

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

WHERE DO 490 CURRENT ALIVE START-UPS COME FROM
Storage is mainly an US sport.

Countries Number
of start-ups
%
USA 343 70%
UK 22 4%
France 20 4%
Canada 16 3%
Israel* 13 3%
India 7 1%
Switzerland 7 1%
Australia 6 1%
China 6 1%
Others 50 10%
Total 490 100%

* Several start-ups were funded in Israel but transferred HQs in USA
(Source: StorageNewsletter.com)

HISTORICAL RECORDS IN TOTAL FINANCIAL FUNDING
(more than $200 million, no one in 2016, four more in 2017)

Start-ups Total financial funding*
Cloudera 1,041
Box 554
Pillar Data Systems 544
Pure Storage 470
Nutanix 370
Infinidat 325
Rubrik 292
SimpliVity 276
Tintri 260
Dropbox 257
MapR 250
Pivot3 247
Infinidat 230
BlueArc 224
Kaminario 218
Actifio 207
StorageNetworks 205
Sanrise 203

* in $ million
New entrants in 2017
(Source: StorageNewsletter.com)

13 NEW START-UPS (known thus far) BORN IN 2016

COMPANY (HQ)
BUSINESS
Aparavi Software
(Santa Monica, CA)
storage agnostic software as a service for long-term data retention; sister company of NovaStor
Atavium (Minneapolis, MN) data management and cloud
Blockade Technologies
(Boca Raton, FL)
blockchain-based storage offered as cloud service
Envemio (Laguna Niguel, CA) I/O Internet controller cards, then for IB and FC
LucidLink
(San Francisco, CA)
cloud backed distributed file service
Nextcloud
(Stuttgart, Germany)
open source file sync and share
Open vStorage
(Lochristi, Belgium)
elastic block storage system that is policy driven, multi-datacenter, multi-cloud with built-in self healing and backup
RStor.io (Los Gatos, CA) in stealth mode
Simply
(Los Angeles, CA)
high-speed storage solutions for media professionals; out of stealth mode in 2016
Sonora Labs
(Aix-en-Provence, France)
Lolas NAS to exchange storage resources to establish content delivery network
StrongBox Data Solutions (Montreal, Canada) data management and storage solutions; acquired StrongBox product business from Crossroads Systems in April 2016; also in Germany
Vast data (Israel) in stealth mode; big data and cloud storage; also in USA
Wasabi Technologies
(Boston, MA)
formerly BlueArchive; cloud-based, object storage as a service

(Source: StorageNewsletter.com)

2 NEW START-UPS (known thus far) BORN IN 2017

COMPANY (HQ)
BUSINESS
Esoptra (Herentals, Belgium) customizable, ultralight information access and integration
L2 Drive (Irvine, CA) HDD technology

ALL 46 FINANCIAL ROUNDS IN 2017

COMPANY (HQ) BORN IN INVESTMENT IN 2017* TOTAL INVESTMENT* BUSINESS  
Atavium
(Minneapolis, MN)
2016 8.65 8.65 data management and cloud
Avere Systems
(Pittsburgh, PA)
2008 14 97 tiered NAS appliances
Bitglass (Campbell, CA) 2013 45 80 data protection on cloud for mobile devices
Burlywood
(Longmont, CO)
2015 3.6 3.7 modular controller architecture that accelerates time-to-market of new NAND adoption; two rounds in 2017
Chaos Sumo (Boston, MA) 1 NA turning Amazon S3 into "smart object storage"
CNEX Labs (San Jose, CA) 2013 23 60 NVMe PCIe SSD controller
Cohesity (San Jose, CA) 2013 90 160 web-scale, converged storage to unify backup, DevOps, and analytics
Diamanti (San Jose, CA) 2014 18 30.5 network and storage solutions for Linux containers; formerly Datawise.io
Diamond (San Mateo, CA) NA 2 NA single access point for all cloud-based email, storage services and personal devices
Druva Software
(Sunnyvale, CA)
2007 80 198 continuous data availability and de-dupe backup software for laptops; investment of NTT in 2016
Elastifile (Santa Clara, CA) 2013 16 74 software-defined storage solution for all-flash, distributed file, object, and block store and serving as enterprise scale out primary storage; R&D in Herzliya, Israel
Excelero (Tel Aviv, Israel) 2014 10 30 software product that leverages, NVMe SSD and SR-IOV and RDMA; also in Santa Clara, CA
Hedvig (Santa Clara, CA) 2012 21.5 52 software-defined storage system for cloud
Iguaz.io (Herzliya, Israel) 2014 33 48 data management and storage solutions for big data, IoT and cloud applications
Infinidat
(Herzliya Pituach, Israel)
2011 95 325 High-end enterprise storage systems; Dr. Alex Winokur one of the founders; Moshe Yanai board's director; also in Needham, MA
Kaminario (Needham, MA) 2008 75 218 all-flash arrays; R&D in Israel
Komprise (Campbell, CA) 2014 12 18 software using analytics-driven adaptive automation to manage massive data growth transparently across all storage silos
L2 Drive (Irvine, CA) 2017 0.5 NA HDD technology
Leonovus
(Ottawa, Canada)
2008 2.8 NA software-defined object storage solution; 1.3 million and 1.5 million in 2017
Liqid (Lafayette, CO) 2013 10 20 on-demand composable infrastructure
Mangstor (Austin, TX) 2011 7.1 32 PCIe flash controller
MapR Technologies
(San Jose, CA)
2009 56 250 distribution for Apache Hadoop for data protection and business continuity; R&D in India
Minio (Palo Alto, CA) 2014 20 NA for developers to build their own cloud storage
Nasuni (Natick, MA) 2009 38 120 secure cloud storage; founded by former executives of Archivas
Nexenta Systems
(Santa Clara, CA)
2005 20 161.5 software-defined storage OS based on Linux and ZFS
Oodrive (Paris, France) 2000 69 NA storage provider with a SaaS platform; acquired Active Circle in 2014
OpenIO (Lille, France) 2015 5 5.2 open source object storage solution for massive storage infrastructures; office in San Francisco, CA
OwnBackup (Fort Lee, NJ) 2012 7.5 11 backup and restore ISV on the Salesforce.com AppExchange; also in Israel
Panzura (Campbell, CA) 2008 32 90 cloud as storage tier integrated into interwoven global file system and global namespace
Portworx
(San Francisco, CA)
1983 20 28.5 software-defined infrastructure for containerized applications
Primary Data
(Palo Alto, CA)
2013 20 83 software-defined storage; merged with Tonian Systems in 2013; office in Israel; $20 million line of credit in 2017
Qumulo (Seattle, WA) 2012 30 130 modern scale-out file storage
Reduxio Systems
(San Francisco, CA)
2012 22.5 47.5 enterprise hybrid storage with 1-second data recovery, in-line in-memory de-dupe and compression and block-level tiering; also in Petach Tikvah, Israel
Rubrik (Palo Alto, CA) 2014 180 292 scale-out storage architecture for backup
ScaleMP (Fort Lee, NJ) 2002 10 NA virtualization solutions for high-end computing
SoftIron (London, UK) 2012 7 NA HyperDrive software-defined storage portfolio built on Ceph
SpinBackup
(San Francisco, CA)
2013 0.5 0.5 cloud-to-cloud backup and cloud cybersecurity solutions
StorageOS (London, UK) 2015 2 NA low entry point, full enterprise functionality storage array integrated with VMWare, Docker, AWS, and Google Cloud
Storj Labs
(Atlanta, GA)
2014 3 5.4 decentralized, end-to-end encrypted cloud storage solution to use blockchain technology and cryptography to secure files
StrongBox Data Solutions (Montreal, Canada) 2016 27 NA data management and storage solutions; acquired StrongBox product business from Crossroads Systems in April 2016; also in Germany
Tegile Systems
(Newark, CA)
2009 33 178 multi-protocol SSD/HDD array with de-dupe for primary storage; acquired by Western Digital in 2017
Trilio Data
(Hopkinton, MA)
2013 5 5 OpenStack backup, recovery and migration solutions
Ugloo (Amiens, France) 2015 1.3 1.9 backup solution of distributed data
Vexata (San Jose, CA) 2013 54 103 SSD real time array
Wasabi Technologies (Boston, MA) 2016 8.5 19.3 formerly BlueArchive; cloud-based object storage as a service; two rounds in 2017: $8.5 and $10.8 million
XSky
(Hong Kong, China)
2015 17 27 distributed block storage solution for enterprises and carrier grade software-defined-storage product for cloud service providers and private cloud customers

* 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.

Read also:
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