There’s a huge race among a crop of fast-growing startups to take a bite out of EMC and today one of them, SimpliVity, got a fresh influx of cash, and a $US1 billion valuation.
SimpliVity has raised $US175 million on a valuation of “more than $US1 billion,” it’s CEO tells Business Insider. Total funding to date is $US276 million.
Equally interesting, the investment was led by one of SimpliVity’s customers, Waypoint Capital, after it used SimpliVity’s storage products in its own data center.
“65% of our customers have moved 100% to SimpliVity,” SimpliVity’s CEO, Doron Kempel told Business Insider. “Which means if you step into their data centres, SimpliVity replaces the whole storage stack. Now we have a customer turned investor.”
Kemple has an impressive personal story, too. He was once part of an elite Israeli special forces unit charged with killing Saddam Hussein. The mission failed, five soldiers were killed, and it affected him deeply. When he was released from the army, he moved to the U.S. and got a job with EMC until launching his first startup, Diligent Technologies, which he sold to IBM in 2008 for around $US165 million.
And in 2009, he turned around and founded SimpliVity.
The hot hyperconverged market
The company started shipping its flagship product, the OmniCube, not quite two years ago and has been growing fast, it says. 2014 revenues were up more 500 per cent from 2013. It has resellers in 50 countries, operations in 18 countries and more than 400 employees worldwide, headquartered in Westborough, Massachusetts.
The OmniCube plays in a part of the market that goes by the buzzword “hyperconverged infrastructure.” This is basically an alternative for the old-school computer storage market dominated by EMC.
The old-school way means buying expensive, specialised computer storage hardware, and then special storage networking devices to connect the hardware, and then expensive software to do things like backups and making sure a company isn’t storing a lot of copies of the same file (known as deduplication).
With a hyperconverged infrastructure, the company buys a low-cost commodity computer servers with special software. The software manages many storage servers as if they were a single computer hard disk.
The upshot: “hyperconverged” storage systems hold a lot of data, are easy to manage, work fast, and cost a less than the old-school method, vendors say.
SimpliVity’s major competitor in this market is Nutanix, which is also going gangbusters. Last summer, it raised a $US140 million ($US312 million to date) on a $US2 billion valuation.
But there’s room at the top for for two or more. Spending in this market is expected to reach $US19 billion by 2018, Garnter predicts.
Meanwhile, EMC’s own subsidiary, VMware, has game here, too. It introduced a software-only competitor, VMware EVO:RAIL, last summer, designed to work on hardware from a variety of partners, like Dell and Fujitsu.
Prior investors Accel Partners, Charles River Ventures, DFJ Growth, Kleiner Perkins Caufield & Byers (KPCB) and Meritech Capital Partner, also participated in SimpliVity’s latest round.