Hi. While this blog is a part of Seed Catalyst’s website, I realised over the initial few weeks that a lot of you are first introduced to the firm via the blog rather than our home page.
So to introduce myself - I’m a business consultant working with early stage technology firms to help streamline their strategy and go-to-market approach and support them for fund raising.
With this blog, I aim to capture key market trends that I see in the industry, the ecosystem and cross-plays in some of the more interesting and upcoming sectors, as well as cover interesting companies that I meet.
I will also be addressing vexing and interesting valuation and deal/term-sheet structures that would be of interest to technology start-ups at various stages of their growth.
A discussion with a VC in November 2009 recently came to mind. He asked me the typical question – what are the trends and investment opportunities you see in the market? And I remember talking about the impact the growth in cloud based services will have on virtualisation software and storage.
A few investments recently bought that conversation to mind. Unfortunately some of them are in stealth mode so not too much information currently forthcoming still worth keeping an eye out.
Bromium is an enterprise software developer focussed on virtualisation and security software. They have just raised (23rd June ’11) $9.2 million from Andreesen Horowitz, Ignition Partners and Lightspeed Ventures. Their website mentions they are focused on the ‘delivery of infrastructure solutions’. Their solutions, it seems, would help address the security concerns for anytime anywhere access to enterprise data and applications. Interestingly, they also have an office in Cambridge, UK.
Another recent investment was Tintri which is developing VM-aware storage solutions (June 15th ’11). Their flagship product VMStore is a 4U box with 8.5TB of spare capacity which can store up to 13 logical TB in one unit. They have just raised $18 million in a Series-C round from NEA and Lightspeed Venture Partners. (In fact storage for virtualised environments is receiving a lot of attention with a variety of solutions.) Tintri is interesting because they are using virtual machine abstractions--VMs and virtual disks--in place of conventional storage abstractions such as volumes, LUNs, or files.
Nutanix came out of stealth mode in April with an initial investment of $13.2 million from Lightspeed Venture and Blumberg Capital. Their focus is also on storage for a virtualised network but the aim is to eliminate the traditional SAN/ NAS architecture. Very succinctly their news article states that virtual machines running on Nutanix appliances use high performance flash and hard disk storage from the cluster ‘in real-time’ for reduced capital and administration costs. Their quote says it best, “The Nutanix approach follows Google's model of leveraging smaller blocks of commodity hardware with a more intelligent software layer, delivering this to enterprises in a hardware appliance that brings the compute and storage together, eliminating the need for costly network-attached storage.”
And another virtualisation storage oriented investment was Virsto which raised $12 million from Interwest Partners, Canaan Partners and August Capital in June 2011. Virsto software is targeted at removing the randomness of read-write operations between VMs and the attached storage thus enhancing the efficiency and effectively turbo charging the IOPS per spindle of existing storage. Virsto’s Virtual Storage Engine (VSE) installed through a simple, software plug-in creates a Virsto vDisk which allows fast, efficient snapshot backup operations based around hypervisor-based storage APIs. Simultaneously they also announced the acquisition of EvoStor, a company specializing in storage virtualization technology for VMware environments.
To keep an eye out for is an interesting firm which has raised a small amount this year, $1.3 million, but will be looking at raising their Series-A later in the year - Midokura. Their focus is true virtualisation of a network i.e. flexibly virtualising networks so that users can create layer 2 switches, routers, load balancers, firewalls et al with the click of a button. In effect virtual machines can be moved around the network with the virtual network following automatically. I am far from an expert on the subject but this sounded interesting to me. All the best for their fund raising!
Another investment this year (Feb ’11) was Nicira Networks which raised $26 million for enterprise network virtualisation from Lightspeed Venture and NEA. Their aim is to deliver software which virtualises networks thus meeting the operational requirements of cloud based data centers. Their network hypervisor decouples network services from the underlying hardware reproducing the entire network service model in logical space.
And we round off with Solidfire, a stealth cloud computing storage platform startup which raised $11 million in Series A from NEA, Valhalla Partners and Novak Biddle Venture Partners. The info available is that they are aimed at providing an enterprise-class cloud storage system. SolidFire’s solid state architecture is said to enable independent virtualization of both capacity and performance, allowing complete flexibility in cloud-scale storage provisioning and management.
All of these are datacenter focused virtualisation solutions. And then there is Appsense providing user virtualisation solutions. This essentially implies that all the user information - corporate policy, settings, rights management, applications – are managed independent of the desktop and can be migrated on-demand to any point of use. The firm recently raised a whopping $70 million from a single investor, Goldman Sachs. Current revenues are $47 million (2010).
In summary,
- There appears to be a significant focus on virtualisation solutions especially storage.
- Two investors who have been recurrent are Lightspeed and NEA. Andreesen Horowitz was recently joined by a venture partner with an infrastructure solution focus and hence followed their investment in Bromium. Accel Partners has also recently added on a venture partner with industry experience from VMWare and other data storage and infrastructure firms, plus two new funds. Worth watching.
- These are investments being made in core technology, appliances and software, rather than just social media and advertising platforms. Two key characteristics of such investments is their high capital requirements and long gestation periods. Is this then a snail paced return to higher risk and longer term investments?
