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Storage Start-Ups in 2018

36 financial rounds, lowest number historically
By Jean Jacques Maleval on 2019.01.07

Since 1998 we analyze the start-ups in the worldwide storage industry, which has allowed us the proper perspective from which to gauge the evolution over time.

2018 was not great year in term of financials deals: few M&As and financial rounds for start-ups.

VCs were less reluctant to invest in storage. The number of financial rounds in 2018 is the lowest since 1999 with 38 - compared to 48 in 2018,- but with biggest rounds for a total amount of $1,442 million up 12% from $1,291 million in 2017.

The highest round last year was $250 million for Cohesity then $100 million for both Actifio and Cloud Constellation, being $180 million for Rubrik in 2017, $175 million for SimpliVity in 2015, and $900 million for Cloudera in 2014.

NUMBER OF FINANCIAL ROUNDS FROM 1996 TO 2018


 

 

 

 

 

 

 

 

 

(Source: StorageNewsletter.com)

LARGEST FINANCIAL ROUNDS IN 2018
(at $60 million and more)

Company in $ million
Cohesity 250
Actifio 100
Cloud Constellation
100
Cloudian
94
Qumulo
93
Egnyte
75
Wasabi Technologies
68
Datrium
60
Scality 60

(Source: StorageNewsletter.com)

There was 9 rounds at $60 million and more last year. N° 1 Cohesity with $250 million this time got already  $90 million in 2017 and $55 million in 2015, with now a total at $410 million. Actifio also surpasses $300 million in 2018 in total funding with $307.5 million.

Why not better in 2018?
The worldwide storage market is no more growing so fast and then not a real good opportunity for investors. Furthermore in 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.

Less 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 only one new firm, Hammerspace, launched last year vs. 7 in 2017, 15 in 2016, 19 in 2015 and 25 in 2014, while these figures will go up as more of start-ups, operating in stealth mode, will come to light. For example, we found only 2  firms born in 2017 at the same time last year, this figure now being increased to 7 now discovered.

One of the reason is that the number of M&As is largely decreasing and often start-ups are created by people leaving acquired companies.

NUMBER OF STORAGE START-UPS LAUNCHED EACH YEAR SINCE 1996
(when the born year is known)(Source: StorageNewsletter.com)

2018 Good Year in Financial Funding
The average amount per round in 2018 is impressive, $38 million, a record since we investigate this market - excluding 2004 with $42 million -, increasing yearly 41%, from $27 million last year.

Investors put much more money in less start-ups.

These past 14 years, VCs have put $28 billion in storage start-ups. This amount is 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 $51 million in total funding, the average per round being $17 million.

ALL FINANCIAL ROUNDS FROM 2003 TO 2018
(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 79 992 13
2005 80 1,004 13
2006 68 818 12
2007 68 789 12
2008 58 751 13
2009 59 591 10
2010 69 865 13
2011 70 1,235 18
2012 88 1,503 17
2013 88 1,645 19
2014 68 2,888 42
2015 60 1,679 28
2016 46 959 21
2017 48 1,291 27
2018
38 1,442  38
TOTAL 1,046 17,819 17

* in $ million
(Source: StorageNewsletter.com)

TOTAL INVESTED IN START-UPS FROM 2003 TO 2018 ALL ROUNDS INCLUDED
(only for companies releasing or calculated total amount invested)

Total invested* 27,664
Number of start-ups 546
Average per start-up* 51

* in $ million
(Source: StorageNewsletter.com)

PER ACTIVITY AMONG CURRENT 495 ALIVE START-UPS

Activity Number %
Software 250 47%
Hardware 147 27%
SSP, cloud
79 15%
Connection 28 5%
Fundamental technology 19 4%
Security 7 1%
TOTAL 530 100%

Total is more than 495 as some companies are listed with more than one activity.
(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 29% 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.

Half 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 967 start-ups)

Became public 34 4%
Sold 278 29%
Closed 172 18%
Remaining start-ups 483 50%

(Source: StorageNewsletter.com)

13 start-ups found a buyer or merged in 2018 - 19 in 2017 - the biggest deal last year being X-IO Technologies sold to Violin for $87.5 million. HPE was an avid acquirer in 2017, buying Nimble Storage for $1.09 billion and SimpliVity for $650 million but only one (BlueData) in 2018.

There was just 4 IPOs in 2015 and 2 in 2016 as well as in 2017 but only one in 2018, by Dropbox, raising an historical record of $1.7 billion.

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

37 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
Dropbox
2018 592 1,700
Average of known figures   154 108

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

WHERE DO 495 CURRENT ALIVE START-UPS COME FROM
Storage is mainly an US sport.

Countries Number
of start-ups
%
USA 342 69%
UK 23 5%
France 20 4%
Canada 14 3%
Israel* 14 3%
India 6 1%
Switzerland 7 1%
Australia 6 1%
China 6 1%
Germany 6 1%
Others 51 10%
Total 495 100%

* 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)

Start-ups Total financial funding*
Cloudera 1,041
Dropbox
592
Box 554
Pillar Data Systems 544
Pure Storage 470
Cohesity
410
Nutanix 370
Infinidat 325
Actifio
308
Rubrik 292
SimpliVity 276
Tintri 260
MapR 250
Pivot3 247
BlueArc 224
Qumulo
223
Kaminario 218
StorageNetworks 205
Sanrise 203

* in $ million
(Source: StorageNewsletter.com)

SEVEN START-UPS (known thus far) BORN IN 2017

COMPANIES (HQ) BUSINESS
Esoptra
(Herentals, Belgium)
customizable, ultralight information access and integration
L2 Drive
(Irvine, CA)
HDD technology
Market.space
(Estonia)
secure and transparent platform for storage, transmission and direct content distribution
plIO/s
(Ramat Gan, Israel)
NAND storage processor; investment from State Of Mind Ventures
ProGrade Digital
(San Jose, CA)
memory card; co-founders and executives from Micron and Lexar
Salvobit
(Sofia, Bulgaria)
secure peer-to-peer software for file sharing; crowdfunding in progress
Upbound
(Seattle, WA)
cloud-native computing enabling organizations to run, scale and optimize their services across multiple public and private cloud environments

(Source: StorageNewsletter.com)

ONE START-UP (known thus far) BORN IN 2018

COMPANY (HQ) BUSINESS
Hammerspace (Los Altos, CA) software-as-a-service to simplify availability and control of unstructured data across hybrid cloud

ALL 39 FINANCIAL ROUNDS IN 2018

COMPANY (HQ) BORN IN INVESTMENT IN 2017* TOTAL INVESTMENT* BUSINESS
Actifio (Weston, MA) 2009 100 307.5 solution for data protection, DR and BC;
Burlywood (Longmont, CO) 2015 10.6 12 modular controller architecture that accelerates time-to-market of new NAND adoption
ClearSky Data (Boston, MA) 2013 20 59 storage network simplifying data lifecycle and delivers enterprise storage as a fully managed sevice
Cloud Constellation
(Los Angeles, CA)
2015 100 105 cloud data storage in space
CloudEndure
(New York, NY)
2012 7 25.2 live-migration and DR solutions; also in Ramat Gan, Israel
Cloudian
(San Mateo, CA)
2011 94 173 hybrid cloud storage platform; formerly Gemini Mobile Technlologies; series B funding from Intel Capital in 2013; last round in joint venture with Digital Alpha; acquired Infinity Storage in 2018
CNEX Labs
(San Jose, CA)
2013 23 83 NVMe PCIe SSD controller; two rounds in 2014, $17 million and then $20 million
Cohesity
(San Jose, CA)
2013 250 410 web-scale, converged storage to unify backup, DevOps, and analytics
CTERA Networks (Petach Tikva, Israel) 2008 30 100 Cloud Attached Storage grouping small NAS into single appliance; also in NYC
Datrium
(Sunnyvale ,CA)
2013 60 170 server-flash storage system
Egnyte
(Mountain View, CA)
2007 75 132.5 cloud storage (online file server)
Excelero
(Tel Aviv, Israel)
2014 5 35 software product that leverages, NVMe SSD and SR-IOV and RDMA; also in Santa Clara, CA
HyperGrid
(San Jose, CA)
2009 40 93 hyper-converged all flash infrastructure; originated in Dublin, Ireland; formerly Gridstore; named change in 2016 following merger with DCHQ; $15 million and $25 million in 2018
Igneous Systems (Seattle, WA) 2013 15 41.6 cloud infrastructure for data you can't or won't move off-premises
Imanis Data
(San Jose, CA)
2013 13.5 16.2 formerly Talena; machine learning-based data management platform that includes cloud migration and backup/recovery tools
infinite.io
(Austin, TX)
2011 10.3 13.7 peer-to-peer software which enables users to access all their data from any of their computing devices
LucidLink
(San Francisco, CA)
2016 5.5 7.1 cloud backed distributed file service
Nantero
(Woburn, MA)
2001 29.7 120 non volatile RAM memory
NGD Systems (Irvine, CA) 2013 12.4 26 SSDs based on own controller, formerly NxGn Data
Nyriad
(Cambridge, New Zealand)
2014 8.5 11 storage solutions for big data and HPC
OpenDrives
(Culver City, CA)
2011 12 23 all-flash and hybrid NAS for media workflows, series B in 2018
OwnBackup
(Fort Lee, NJ)
2012 15.5 26.5 backup and restore ISV on the Salesforce.com AppExchange; also in Israel
Pavilion Data Systems
(San Jose, CA)
2014 15
33 processor agnostic storage in PCIe-based shared storage environment
Preservica (Abingdon Oxfordshire, UK) 2012 10 13.7 active digital preservation software; also in Boston, MA
Qumulo
(Seattle, WA)
2012 93 223 scale-out file storage
Robin Systems
(San Jose, CA)
2013 17 39 data-centric compute and storage containerization software
RStor.io
(Saratoga, CA)
2016 45 45 hyper-distributed multicloud platform
Scale Computing (Indianapolis, IN) 2008 34.8 95.8 hyperconverged solutions
ScaleFlux
(San Jose, CA)
2014 25 40 computational storage subsystem; also in Beijing, China
Scality
(San Francisco, CA)
2010 60 152 massively scalable storage platform; spin-off from Bizanga; R&D in Paris; formerly BizangaStore; investment of HPE in 2016, probably around $10 million
SkyKick
(Seattle, WA)
2011 40 65 SaaS cloud automation and management products for Microsoft information technology service providers
Spin Memory (Fremont, CA) 2007 52 158 orthogonal spin transfer magneto-resistive random access memory technology
Storage Made Easy
(Sutton, UK)
2008 4 6.5 secure private enterprise file sharing and synchronization; wholly-owned by Vehera Ltd.; formerly SMEStorage
StorageOS
(London, UK)
2015 8 NA low entry point, full enterprise functionality storage array integrated with VMWare, Docker, AWS, and Google Cloud
Tresorit
(Budapest, Hungary)
2011 11.5 18 cloud-based, secure file synchronising software; 80 million HUF investment from Euroventures IV
Upbound
(Seattle, WA)
2017 9 NA cloud-native computing enabling organizations to run, scale and optimize their services across multiple public and private cloud environments
Wasabi Technologies (Boston, MA) 2015 68 NA cloud-based object storage as a service; formerly BlueArchive, successor of Storiant in software for cold storage
Weebit Nano
(Hod Hasharon, Israel)
2015 3 NA in semiconductor memory elements to become faster, more reliable energy efficient and cost effective NVM
Zadara Storage (Irvine, CA) 2011 25 60 software-defined storage as a service for public and private clouds (NAS and SAN); also in Nesher, Israel

* 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:
Storage Start-Ups in 2017
VCs investing 34% more than in 2016
Storage Start-Ups in 2016
Worst year since 2003
by Jean Jacques Maleval | 2017.01.10 | News
Storage Start-Ups in 2015
Worst year since 2003 in number of financial rounds
by Jean Jacques Maleval | 2016.01.06 | News
Storage Start-Ups in 2014
Historical record for just one financial round: $900 million for ...
by Jean Jacques Maleval | 2015.03.03 | News
Storage Start-Ups in 2013
$1.3 billion invested in 57 companies following 58 financial rounds
by Jean Jacques Maleval | 2014.01.08 | News
Storage Start-Ups in 2012
Innovation never stopping in industry, 67 new rounds last year
by Jean Jacques Maleval | 2013.02.13 | News
ANALYSIS: Storage Start-Ups in 2011
Record year in total financial funding: more than $1 billion
by Jean Jacques Maleval | 2012.01.04 | News
ANALYSIS: STORAGE START-UPs IN 2010
52 investment rounds vs. 49 in 2008 and 2009
by Jean Jacques Maleval | 2011.01.03 | News

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