Enterprise IT initiatives aimed at digital transformation and AI are no doubt real and they are now impacting traditional IT. Here I’m referring to the traditional practices IT staff apply to new applications in order to bring them into operational production. It’s a process that for some can last two years.
Part of this process is risk-related. IT staff must be able to assure application availability to users as well as minimize exposure to data loss and corruption. Traditionally speaking, that means new applications must be included under the enterprises overall data management and protection umbrella. And there is a list of large, well-known name vendors that can step up to the requirements.
However, a number of growing and well-funded independent software vendors have also accepted the challenge. How well funded? In June of 2018, a secondary data management and data protection ISV named Cohesity announced that it had raised $250M in an over-subscribed Series D round, bringing its total equity raised to $410M. This latest cash infusion is being used to further a large-scale global expansion. Participants included Cisco Investments, HPE, Morgan Stanley Expansion Capital, and Sequoia Capital.
Now fast forward to last Tuesday, January 15, when Rubrik, another ISV in the same space, announced a $261 million Series E funding round which, according to Rubrik, represents an investment estimated at a $3.3 billion in valuation. The funding round included new investor Bain Capital Ventures, with strong participation from existing investors Lightspeed Venture Partners, Greylock Partners, Khosla Ventures and IVP. Rubrik stated the Series E round brings equity raised to more than $553 million. Rubrik stated that it will use the new funding for general corporate purposes, continued future innovation and to support the launch of major new products planned for 2019.
A day later, Veeam Software announced that Insight Venture Partners invested $500 million with additional participation from Canada Pension Plan Investment Board (CPPIB). According to the announcement, Veeam will leverage Insight Venture Partners’ internal business strategy arm, Insight Onsite, and capital to accelerate its expansion through both organic growth and M&A activities. For a company that was essentially self-funded since its inception more than a decade ago, this investment represents a significant step forward.
So, add it up. The Veeam investment brings the total equity raised by these three ISVs in this space within the last six months alone to over $1B.
Recent research conducted by the Evaluator Group sheds light on the investment interest. At least half of medium to large scale enterprise IT shops see in light of data growth stimulated by new corporate initiatives along with security and compliance concerns, that there is now a need to reevaluate and possibly replace data protection and management infrastructure.
Data growth is a broad challenge in itself which goes beyond growing the storage capacity to hold all the data. The challenge includes discovering, characterizing and protecting data that is cropping-up in both private and public cloud data centers Therefore, it is not surprising that over 96% of enterprise IT respondents indicated in the Evaluator Group survey that the importance of the data protection initiatives over the next two years within their organizations for example will be the same or will become more important than they are today, with the majority (53%) reporting they will become more important. As a result of re-evaluating their data protection strategies and potentially changing their backup and recovery solutions, a majority of these respondents (almost 57%) indicated that it is likely or very likely they will replace or augment their existing backup solution in the next 12 to 24 months.
The investment community is now taking notice that enterprise IT is entering into a period of significant change regarding data management and risk mitigation. Change is driven by the need to encompass new applications such as AI as well as exert oversight across multiple data environments—both on premises and off—with simpler and more cost-effective solutions. Even NBA MVP Kevin Durant is on board as an investor and adviser for Rubrik.