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Storage Start-Ups in 2019

No one ! It never happens historically.

Since 1986 we analyze the start-ups in the WW storage industry, which has allowed us the proper perspective from which to gauge the evolution over time.

2019 was not great year at all: we didn’t find any new one born that year up to now and such a disaster never happens historically.

Furthermore VCs were less reluctant to invest in storage. The number of known financial rounds in 2019 was only 32,  and 2018 was the lowest since 1999 with 47 to be compared to 57 in 2018,- but with biggest rounds for a total amount of $2,200 million up 33% from $1,650 million in 2018, this later figure up 13% from $1,460 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 NEW START-UPS LAUNCHES EACH YEAR FROM 1996 TO 2019
(when born year is known)
History Startup F1
 (Source: StorageNewsletter.com)

LARGEST FINANCIAL ROUNDS IN 2019
(at more than $100 million)

Company in $ million
Kaseya 500
Veeam Software
500
Rubrik
261
Clumio
186
Acronis
147
Druva Software
130

(Source: StorageNewsletter.com)

There was 6 rounds at $100 million and more last year, 9 rounds at $60 million and more in 2018. Number ones Kaseya and Veeam got half million dollar in 2019, not bad, their total being $567 million and $500 million respectively.. Cohesity received $250 million in 2018 and  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 poor results in 2019?
The WW 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 98 new entities sprang up in a single year. We were not able to find one last year vs. 7 in 2018, 10 in 2017, 23 in 2016, 30 in 2015 and 28 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 one  firm born in 2018 at the same time last year, this figure now being increased to 7 now discovered.

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

NUMBER OF FINANCIAL ROUNDS EACH YEAR SINCE 2000
(when amount is known)
History Start Ups Financia Rounds 2019
(Source: StorageNewsletter.com)

But 2019 Good Year in Financial Funding
On the positive side, the average amount per round when known in 2019 is impressive, $69 million – a record since we investigate this market -, increasing yearly 97%. It was $35 million in 2018 and $26 million in 2017.

Finally, investors put much more money in less start-ups.

VCs have put $30.5 billion in storage start-ups since we collect these data. This amount is higher than the total figure in the table below from 2000 to 2019 only.

On average, a company got historically $53 million in total funding.

TOTAL INVESTED IN START-UPS FROM 2003 TO 2019 ALL ROUNDS INCLUDED
(only for companies releasing or calculated total amount invested)

Total invested $30.5 billion
Number of start-ups 577
Average per start-up $52.9 million

(Source: StorageNewsletter.com)

PER ACTIVITY AMONG CURRENT 515 ALIVE START-UPS

Activity Number %
Software 253 46%
Hardware 157 29%
SSP, cloud
82 15%
Connectivity 28 5%
Fundamental technology 19 3%
Security 7 1%
TOTAL 546 100%

Total is more than 515 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 3% eventually go public, and thus allow investors generally more than just to recoup their original stake. The same is generally true for the 30% 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 17% 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
(out of a total 1,002 start-ups)

Became public 34 3%
Sold 298 30%
Closed 173 17%
Remaining start-ups 497 50%
TOTAL
1,002 100%

(Source: StorageNewsletter.com)

11 start-ups found a buyer in 2019, 13 in 2018, 19 in 2017 – the biggest deal last year being Hedvig sold to Commvault for $225 million. In 2018, it was 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.

No IPO was recorded in 2019. It never happens since 2012. There was just 4 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.

To get more money to finance the growth of young companies, IPO seems 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 756 1,700
Average of known figures   159 202

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

WHERE DO 513 CURRENT ALIVE START-UPS COME FROM?
Storage is mainly an US sport.

Countries Number
of start-ups
%
USA 357 70%
UK 25 5%
France 20 4%
Canada 17 3%
Israel* 14 3%
China 7 1%
Switzerland 7 1%
Australia 6 1%
Belgium 6 1%
Germany 6 1%
India 6 1%
Others 42 10%
Total 513 100%

* 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*
Dropbox
1,700
Cloudera 1,041
Kaseya
567
Box 554
Rubrik
553
Pillar Data
544
Veeam
500
Pure Storage 470
Cohesity
410
Nutanix 370
Druva
328
Infinidat 325
Actifio
308
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 2018

Company
(HQ)
Total
investment
in $ million
Business
3Box
(New York City, NY)
2.5 decentralized identity and storage infrastructure; also in Berlin, Germany
Agilestorage
(San Jose, CA)
NA hybrid and flash appliances
Asura Technology
(Chino, CA)
NA SSDs
Grax
(Boston, MA)
12.8 captures irrefutable and recoverable record of every single change that happens to data over time
Hammerspace
(Los Altos, CA)
NA software-as-a-service to simplify availability and control of unstructured data across hybrid cloud
ShardSecure
(New York City, NY)
NA Microshard technology offers protection for storing and sharing data in cloud; seed funding in 2019
Xoralgo
(Wilington, DE)
NA PentaRAID, new RAID technology

(Source: StorageNewsletter.com)

ALL 32 FINANCIAL ROUNDS IN 2019

Company
(HQ)
Born in Investment in 2019* Total investment* Business
Box
(New York City, NY)
2018 2.5 2.5 decentralized identity and storage infrastructure; also in Berlin, Germany
Acronis
(Burlington, CA)
2000 147 158 backup software
Alluxio
(San Mateo, CA)
2015 8.5 16 memory-centric distributed storage system; formerly Tachyon Nexus
Atempo
(Les Ulis, France)
1992 8 43.9 backup and archiving software; formerly Quadratec; acquired Storactive in 2006, Lighthouse Global Technologies in 2008, ASG Software Solutions in 2011; becoming independent company with Woxoo in 2017; acquired Synerway in 2017
Avalanche Technology
(Fremont, CA)
2006 33 140.5 low power non-volatile magnetic memory
Bamboo Systems
(Cambridge, UK)
2015 4.5 5 global hyperconvergence platform; US HQs in Charlotte, NC; formerly Kaleao
Clumio
(Santa Clara, CA)
2017 186 186 SaaS for enterprise backup; $51 million in 2 rounds in 2019, and $135 million same year in series C
Diamanti
(San Jose, CA)
2014 35 78 network and storage solutions for Linux containers; formerly Datawise.io
Druva Software
(Sunnyvale, CA)
2007 130 328 continuous data availability and de-dupe backup software for laptops; investment of NTT in 2016; originally in Pune, India
EndureDR
(Israel)
2015 2.5 2.5 recovery readiness solution; also in San Jose, CA
Folio Photonics
(Cleveland, OH)
2012 8 12.2 optical disc holding 1TB or 2TB, spun-off from the Center for Layered Polymeric Systems
Grax
(Boston, MA)
2018 12.8 12.8 captures irrefutable and recoverable record of every single change that happens to data over time
Igneous Systems
(Seattle, WA)
2013 5 66.6 cloud infrastructure for data you can’t or won’t move off-premises
JetStream Software
(San Jose, CA)
2016 7.7 11.5 data management software for enterprise hybrid cloud computing
Kaseya
(New York City, NY)
2000 500 567.4 complete IT infrastructure management software; acquired Unitrends, Spanning Clup Apps, IT Glue and RapîdFire Tools in 2018, ID Agent in 2019
Kasten
(Los Altos, CA)
2017 14 17 cloud-native data management for Kubernetes
Komprise
(Campbell, CA)
2014 24 42 software using analytics-driven adaptive automation to manage massive data growth transparently across all storage silos
Liqid
(Lafayette, CO)
2013 28 50 on-demand composable infrastructure
MemVerge
(San Jose, CA)
2017 24.5 24.5 software and hardware to empower seamless convergence of main computer memory and storage using single pool of Intel Optane DC; one seed round in 2017
Nasuni
(Boston, MA)
2009 25 145 secure cloud storage; founded by former executives of Archivas
Odaseva
(San Francisco, CA)
2012 11.7 14 in Salesforce data protection; also in Paris, France, and NYC
OwnBackup
(Englewood Cliffs, NJ)
2012 23.3 49.8 backup and restore ISV on the Salesforce.com AppExchange; also in Israel
Pavilion Data Systems
(San Jose, CA)
2014 25 58 processor agnostic storage in PCIe-based shared storage environment
PlIO/s
(Ramat Gan, Israel)
2017 20 45 NAND storage processor; investment from State Of Mind Ventures
Portworx
(San Francisco, CA)
2014 27 55.5 software-defined infrastructure for containerized applications
RackTop Systems
(Fulton, MD)
2010 15 15.8 secure, high-performance NAS platform
Rubrik
(Palo Alto, CA)
2014 261 553 scale-out storage architecture for backup; two rounds in 2015, $10 million and $41million; acquired Datos IO in 2018
Sage Microelectronique
(Hangzhou City, China)
2011 35   SSD controller IC; acquired Initio in 2016
VAST Data
(New York City, NY)
2016 40 80 Universal Storage Architecture with flash memory to bring end to enterprise HDD and storage tiering area; also in Tel Aviv, Israel
Veeam Software
(Baar, Switzerland)
2006 500 500 storage backup software for virtualization environments
Weebit Nano
(Hod Hasharon, Israel)
2015 3.1 NA in semiconductor memory elements to become faster, more reliable energy efficient and cost effective NVM
WekaIO
(San Jose, CA)
2014 32.7 66.7 software-defined storage scales storage to hundreds of petabytes, tens of millions of IO/s, sub milliseconds latency; also engineering in Tel Aviv, Israel; $2 million investment from Western Digital Capital in 2019 included


* 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.

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