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.

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