Insight Partners to Acquire Veeam for $5 Billion – With Our Comments
Becoming no more Swiss but US company
This is a Press Release edited by StorageNewsletter.com on January 13, 2020 at 2:19 pmSoftware investor Insight Partners entered into a definitive agreement to acquire Veeam Software, Inc.
Under the ownership of Insight Partners, Veeam will become a US company, with a US-based leadership team, while continuing its expansion from offices in 30 countries and with customers in over 160 countries. The acquisition, which is expected to close during 2Q20, will enable Veeam to accelerate its Act II (Veeam’s evolution into hybrid cloud), expand into new markets and continue its growth.
As part of the acquisition, William H. Largent has been promoted to CEO – he previously held the role of EVP operations – and Danny Allan has been promoted to CTO.
Following an investment from Insight Partners at the beginning of 2019, Veeam, with over $1 billion in annual sales and more than 365,000 customers worldwide, worked alongside Insight Partners’ business strategy and ScaleUp division, Insight Onsite, to expand its software-defined Veeam Cloud Data Management Platform.
The company launched a number of innovations over the last year, including Backup for Amazon Web Services, Backup for Microsoft Office 365 v4, Universal License (VUL) and announcing Backup for Microsoft Azure – growing its share of the US market, as well as cementing its position in the global market.
The acquisition and bolstering of US leadership will accelerate Veeam’s growth trajectory and expansion into adjacent markets.
“Veeam has enjoyed rapid global growth over the last decade and we see tremendous opportunity for future growth, particularly in the US market. With the acquisition, we are excited that our current US workforce of more than 1,200 will be expanded and strengthened to acquire and support more customers,” said Largent. “Veeam has one of the highest caliber global workforces of any technology company, and we believe this acquisition will allow us to scale our team and technology at an unrivaled pace.”
At the core of Veeam’s strategy is delivering simplicity, flexibility and reliability to its customer base (which includes 81% of the Fortune 500).
During the last decade, Veeam’s approach has seen it collect more than 170 industry awards, named as a leader in three consecutive backup and data recovery Magic Quadrants by Gartner, boast a leadership position in the Forrester Wave and also named as one of Forbes’ Cloud 100 companies for four straight years.
According to the latest IDC Software Tracker, Veeam is the #1 market-share leader in EMEA and the #4 worldwide, after Dell EMC, Veritas and IBM.
It is delivering backup solutions that enable cloud data management, and has recently launched new cloud-native solutions that will enable customers to manage, migrate, orchestrate and protect data across AWS and Azure environments – core elements of its Act II. In the coming weeks, new Availability Suite v10 will be available, providing users with a powerful software-defined data management solution.
“In a world where a business’s most valuable asset, its data, is constantly on the move and being created at unprecedented rates, data management has never been more critical, and more complex. Legacy solutions cannot keep up. Veeam’s software provides holistic coverage for the modern business,” Allan said. “While Veeam’s preeminence in the data management space, currently supporting 81% of the Fortune 500, is undeniable, this commitment from Insight Partners and deeper access to its unmatched business strategy and ScaleUp division, Insight Onsite, will bring Veeam’s solutions to more businesses across the globe.”
“Veeam’s strong growth, coupled with high customer retention, unparalleled data management solutions and the opportunities to expand services into new markets, make Veeam one of the most exciting software companies in the world today,” Insight Partners MD and Veeam board member Mike Triplett said. “Veeam’s platform is the most advanced and complete data management solution available to businesses requiring a seamless blend of backup and recovery, data protection, data security and data availability. We are committed to supporting Veeam’s next phase of leadership and growth in the United States, continued market-share leadership position in EMEA and continued global expansion.”
The board of directors will be supplemented with seasoned software, government and business leadership as co-investor Nick Ayers, Ayers Neugebauer and Company, a member of the World Economic Forum’s Young Global Leaders and former chief of staff to the VP of the United States, joins Insight Partners MD Triplett and Largent on the board.
Following the acquisition, co-founders Andrei Baronov and Ratmir Timashev will step down from the board. Additionally, Insight Partners MDs Ryan Hinkle and Ross Devor will each serve on the board once the acquisition has been completed.
Goldman Sachs & Co., J.P. Morgan and Morgan Stanley served as financial advisors, and Willkie Farr & Gallagher LLP served as legal counsel, to Insight Partners. Ropes & Gray LLP served as legal counsel to Veeam. Financing commitments for the transaction provided by affiliates of J.P. Morgan, Goldman Sachs & Co., Morgan Stanley, Ares Management Corp., Bank of America Corp., Golub Capital and Antares Capital LP.
Comments
By Jean-Jacques Maleval and Philippe Nicolas
Fast growing Veeam couldn't refuse such an offer, $5 billion, of course, but the transaction is not so common coming from its main investor, Insight Partners, a VC and private equity firm.
It's the biggest one for this year just beginning, but also in 2019 if you omit the $6.2 billion spent by Nvidia to get Mellanox, the undisputable record being $63 billion for the acquisition of EMC by Dell in 2015.
An example that Veeam is rapidly growing: it announced annual recurring revenue up 24% Y/Y in 3Q19 with subscription pricing model seeing 108% rises in bookings pushed by the excellence and the price of its software: Availability Platform, Availability Suite, Backup & Replication particularly for virtual infrastructure
The start-up could try an IPO with revenue announced at greater than $1 billion even if profitability or loss never were revealed. On its side, Coldago Research has named Veeam for several sequential notes as an unicorm and its value at a minimum of $3 billion last December.
We bet that several big firms were interested to absorb Veeam. It also could be a nice acquisition for Commvault or Veritas suffering from Veeam's progress as well as exclusive resellers including HPE (rumored to be looking at the company in 2017), NetApp, Cisco and Lenovo. And why not Dell EMC, IBM, Veritas - the top 3 industry heavyweights for IDC - or VMware, all with vastly greater financial and sales channel resources? In the last Magic Quadrant for Data Center Backup and Recovery Solutions published on October 10, 2019, Gartner ranked Veeam ≠3 as leader behind Commvault and Veritas and in front of Dell EMC and IBM.
In 2018, Veeam acquired N2W Software in IaaS data protection providing cloud-native backup solution AWS workloads for $42.5 million and nworks for an unknown amount, this one focused on enterprise management connectors bridging the gap between VMware virtual infrastructure and enterprise systems management tools from HP. But it sold or divested this acquisition in October 2019 because customer, US government, didn't like that the subsidiary was owned by Russian executives. Like Veeam, N2WS is also an Insight company.
But an interesting part of the story is that Insight owns several data protection companies and continues to manage carefully its portfolio to potentially build a software giant. By managing its portfolio, the two recent examples with Mirantis acquiring Docker Enterprise and Acronis and 5nine illustrate that perfectly, all these 4 companies are Insight investments.
Historically, Aelita Software, providing enterprise network management tools for improved security, usability, and control, was founded in 1997 by Ratmir Timashev (see below) with the help of Insight, and acquired for $115 million on March 2004 by Quest Software then sold to Dell in 2012 for $2.36 billion to form Dell Software.
On the data protection side, Insight has invested in several companies: N2WS, OwnBackup, Spanning Cloud Apps, Unitrends and already managed some portfolio consolidations as Spanning and Unitrends are owned by Kaseya, also an Insight company. It got Spanning from Dell EMC in 2017, has participated in OwnBackup $23 million series C in May 2019, and It has investments in Acronis, DataCore, Mimecast ($32 million in 2012), Solarwinds and Kasten.
Acronis has recently raised $147 million from Goldman Sachs and became an unicorn as mentioned by CB Insights and Coldago Research.
The acquisition of Veeam is not really surprising as Insight already injected $500 million one year ago January 2019 in the backup software start-up, its only one financial round since inception 14 years ago.
SaaS backup is hot and cloud globally especially Office 365, AWS and Azure appear to be strategic for Veeam. Veeam must face competition from Cohesity, Rubrik, HYCU or even the newcomer Clumio. We heard early December some rumors about a potential future investment of Veeam in Cobalt Iron coupled with a reseller or OEM deal of the SaaS backup solution. But honestly why this move as Insight has already several interesting SaaS backup solutions in its portfolio like OwnBackup but also Spanning and again N2WS, having solved the regulations challenge with Veeam becoming a US firm. For Spanning, it would mean a deal with Kaseya. Following this idea, why not unify and aggregate something bigger between Veeam and Kaseya and build a giant ISV. If we go further Acronis + Veeam + Kaseya would form an other giant covering cyber security, IT management and cloud data management with some small overlaps but also some good synergies and leadership positions. What is sure is Veeam won't develop a SaaS data management solution…
It seems that Insight will never stop to spend money. Since the beginning of the year, it led series B financing round of $23.5 million received by clinical analytics start-up Covera, and acquires Armis in enterprise IoT security at a $1.1 billion valuation.
Founded in 1995, the VC and private equity firm currently has over $20 billion of assets under management and has cumulatively invested in more than 300 companies worldwide, putting money in high-growth technology and software companies driving transformative change in their industries.
Russians-born IT entrepreneurs Andrei Baronov and Ratmir Timashev co-founded in and owned Veeam with HQs in Baar, Switzerland, with R&D outside of St. Petersburg, Russia, and main R&D center in Prague, Czech Republic, on which it invested $150 million to expand it in 2018 to attract additional 500 software developers, adding to its current workforce of more than 3,600 employees worldwide. It launched its first product, Veeam Backup & Replication in 2008 with a team of 10 employees.
Timashev was CEO from April 2006 to August 2014 then president and then downgraded to current EVP WW sales and marketing since around 3 years. He continues to be listed with this position on Veeam's web site but we don't see him remaining a long time. As we known this voluble and active entrepreneur, we supposed that it will find opportunities to rebound after getting a lot of money following the acquisition.
Both co-founders will leave Veeam's board.
But other board's member William H. Largent will remain in the company as it has been promoted to CEO and chairman after being its EVP operations. Prior that, he was CEO of Applied Innovation, Inc.
One of firm's weaknesses is the difficulties to convince US customers, particularly in the enterprise market, to buy its solutions developed in Russia, as it's also the case for Huawei in China for example. That's why Insight has decided to move Veeam's HQs in USA to be easier eligible to bid for US Government contacts. According to IDC, revenue of Veeam comes from 55% from EMEA and only 35% from North America.
The company claims 365,000+ customers worldwide, including 81% of the Fortune 500 and 66% of the Global 2000, and 70,000+ partners, with offices in more than 30 countries
Here is a commentary from Dan Timko, chief strategy officer, cloud backup, J2 Global, which includes OffsiteDataSync, LiveDrive and KeepItSafe business, OffsiteDataSync and KeepItSafe being both Veeam Platinum Partners.
"The best part of this deal is that Insight Partners is the buyer. They've been close to Veeam for many years, well before their $500 milion investment last year. They have long played a role in the company's strategic vision and have worked closely with the management team, so I'm confident the company is in good hands and will continue to invest in growth. Danny Allan's promotion to CTO and Bill Largent's promotion to CEO are both great moves that ensure continuity of leadership, both on the product side and for the company's channel strategy. Insight's vast resources should help Veeam continue to grow rapidly in a competitive and quickly changing market. Ultimately, I think this is a great deal for Veeam and its partners."
Look also at:
Insight Partners to Acquire Veeam - and Usher in a New Era for the Company, from IDC, published on January 9, 2020, written by analysts Phil Goodwin, Ashish Nadkarni and Crawford Del Prete.
Gartner Magic Quadrant for Data Center Backup and Recovery Solutions
published on October 10, 2019 - ID G00380806, written by analysts Santhosh Rao, Chandra Mukhyala and Nik Simpson.
Read also:
Insight Venture Partners Invests Incredible $500 Million in Veeam
With strong participation from Canada Pension Plan Investment Board [with our comments]
January 17, 2019 | Press Release
Insight Venture Partners Strong in Data Protection
With investments into several firms in this field
by Philippe Nicolas | December 15, 2017 | News
Spanning Acquired From Dell EMC by Insight Venture Partners
Becoming independent company in SaaS data protection
April 21, 2017 | Press Release
Unitrends Receives Unknown Growth Equity Investment
From Insight Venture Partners
November 4, 2013 | Press Release
Veeam Bookings Revenue Doubling From 2Q12 to 2Q13
Peter Ruchatz CMO, Insight Venture Partners acquired minority share
July 31, 2013 | Press Release
Mimecast Secures $62 Million in Series C
Led by Insight Venture Partners, total at $83 million
September 28, 2012 | Press Release
Quest Software to Become Private
In $2 billion transaction, following agreement with Insight Venture Partners
March 19, 2012 | Press Release
PHD Virtual Technologies Announces Citrix Investment
And additional funding from Insight Venture Partners
May 27, 2010 | Press Release
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