With a small but steadfast lead in the nascent managed storage services market, Storability Inc. recently leaped out of the fund-raising gate with $30 million in fresh venture capital.
The Series B infusion is designed to lengthen the Southborough, Mass.-based company?s financial runway to cash-flow positive, which is projected for early next year, said Steve Milmore, director of corporate communications with Storability. With the closing of its latest VC round, the 16-month-old company has brought its total venture capital take to $48.5 million.
New investors Technology Partners and Sprout Group co-led the second round deal, with additional participation from Lee Munder Venture Partners and Series A backers Battery Ventures, Madison Dearborn and Lightspeed Venture Partners.
The round wasn?t oversubscribed, but Storability garnered significant investor interest nonetheless because its business model is slightly different from most run-of-the-mill storage services firms, according to Jason Yotopoulos, a partner with Technology Partners.
“After canvassing the [storage services] space, it became clear to us that Storability had the most capital-efficient model in the industry in addition to the most flexible technology platform,” Yotopoulos said. “What is unique about their approach to storage service provision is that they don?t offer boxes, pipes or expensive real estate. They provide what?s fundamentally lacking in this industry that?s currently experiencing explosive growth, and that?s automated storage management expertise.”
With corporate data centers nearly bursting at the seams ? and the need for capacity increasing as much as 80% per year ? many enterprises have been forced to go out and purchase expensive data storage equipment. Oftentimes, however, they don?t have the in-house expertise to install and manage that equipment once they have it on site.
“Nobody ever got promoted for managing storage. One only realizes it?s mission-critical when the data infrastructure goes down and they need to bring it back up by tapping the storage reserves,” Yotopoulos explained. “Frankly, people get fired when that doesn?t work. It?s virtually impossible for many organizations today to have the quality service and uptime that Storability?s management service can provide them.”
As such, the company?s flagship product, which is based on its own AssurENT architecture, is reportedly able to save global 2000 and data center customers as much as 50% of the total costs associated with managing their own storage infrastructure. What is more, Storability?s customers can store their data within their walls while having the company manage and monitor it from a remote location. Other storage services providers offer capacity, but don?t necessarily provide remote data management capabilities while allowing corporations to store information within their own facilities.
Crowded Storage Space
Both Technology Partners? Yotopoulos and Storability?s Milmore said they believe that the company?s potential competitors in the already over-crowded storage services space will eventually have to switch over to a model similar to Storability?s to keep their costs down and, ultimately, to survive.
“In an era of cheap capital, building $600 million to $900 million infrastructure like storage networks was imminently feasible,” Yotopoulos said. “Today it simply is not. And half a dozen to a dozen traditional storage service providers are at risk purely because of the capital intensity of their business model. Moreover, they will be experiencing increased competition from a number of players such as the large global data centers whom Storability empowers.”
In order to maintain its competitive edge as long as possible, Storability intends to use the proceeds from this latest VC infusion to continue ramping up its product and deploying it to enterprises around the world.
Yotopoulos and Sprout Group GP Alex Rosen joined Storability?s board of directors as part of the second round transaction.
Contact Robyn Kurdek: Robyn.Kurdek@tfn.com