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Snowflake’s IPO could value it as high as $24B, Salesforce and Berkshire to invest
On the heels of new filings from both Sumo Logic and JFrog, Snowflake, a venture-backed unicorn looking to go public on the strength of its data-focused cloud service, set an initial price range for its IPO.
The $75 to $85 per-share IPO price target values the firm at between $20.9 billion and $23.7 billion, huge sums for the private company. Its IPO could raise more than $2.7 billion for the startup.
Snowflake was last valued at around $12.5 billion when it raised a Series G worth $479 million earlier this year.
Built into those valuation projections are two private placements of stock in Snowflake, $250 million apiece from both Salesforce, the well-known CRM player, and Berkshire Hathaway, better known for its investment returns in the 80s and 90s, Cherry Coke and Charlie Munger’s humor.
Jokes aside, the inclusion of Salesforce in the IPO is notable, but not a shock, but Berkshire taking part in the public market debut of Snowflake, a company with historic losses that are nigh-tyrannical, is.
Here’s the S-1/A text on the setup:
Immediately subsequent to the closing of this offering, and subject to certain conditions of closing as described in the section titled “Concurrent Private Placements,” each of Salesforce Ventures LLC and Berkshire Hathaway Inc. will purchase $250 million of our Class A common stock from us in a private placement at a price per share equal to the initial public offering price. Based on an assumed initial public offering price of $80.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, each of Salesforce Ventures LLC and Berkshire Hathaway Inc. would purchase 3,125,000 shares of our Class A common stock. […]
In addition, Berkshire Hathaway Inc. has agreed to purchase 4,042,043 shares of our Class A common stock from one of our stockholders in a secondary transaction at a price per share equal to the initial public offering price that will close immediately subsequent to the closing of this offering.
That second paragraph makes it clear that Berkshire is actually looking to snooker even more shares into its corner, for a total purchase price that might scale to more than $500 million.
What is so attractive about Snowflake? TechCrunch wrote a bit about that when the company filed, but the short gist is that it has epic growth, improving gross margins and dramatically curtailed losses. The package adds up to one valuable IPO, and something durable enough to tempt Buffett.
Regardless, what could be the most highly valued IPO of the year — Airbnb depending — here in America just got a lot more exciting.
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Qumulo scores $125M Series E on $1.2B valuation as storage biz accelerates
Qumulo, a Seattle storage startup helping companies store vast amounts of data, announced a $125 million Series E investment today on a $1.2 billion valuation.
BlackRock led the round with help from Highland Capital Partners, Madrona Venture Group, Kleiner Perkins and new investor Amity Ventures. The company reports it has now raised $351 million.
CEO Bill Richter says the valuation is more than 2x its most recent round, a $93 million Series D in 2018. While the valuation puts his company in the unicorn club, he says that it’s more important than simple bragging rights. “It puts us in the category of raising at a billion-plus dollar level during a very complicated environment in the world. Actually, that’s probably the more meaningful news,” he told TechCrunch.
It typically hasn’t been easy raising money during the pandemic, but Richter reports the company started getting inbound interest in March just before things started shutting down nationally. What’s more, as the company’s quarter closed at the end of April, they had grown almost 100% year over year, and beaten their pre-COVID revenue estimate. He says they saw that as a signal to take additional investment.
“When you’re putting up nearly 100% year over year growth in an environment like this, I think it really draws a lot of attention in a positive way,” he said. And that attention came in the form of a huge round that closed this week.
What’s driving that growth is that the amount of unstructured data, which plays to the company’s storage strength, is accelerating during the pandemic as companies move more of their activities online. He says that when you combine that with a shift to the public cloud, he believes that Qumulo is well positioned.
Today the company has 400 customers and more than 300 employees, with plans to add another 100 before year’s end. As he adds those employees, he says that part of the company’s core principles includes building a diverse workforce. “We took the time as an organization to write out a detailed set of hiring practices that are designed to root out bias in the process,” he said.
One of the keys to that is looking at a broad set of candidates, not just the ones you’ve known from previous jobs. “The reason for that is that when you force people to go through hiring practices, you open up the position to a broader, more diverse set of candidates and you stop the cycle of continuously creating what I call ‘club memberships’, where if you were a member of the club before you’re a member in the future,” he says.
The company has been around since 2012 and spent the first couple of years conducting market research before building its first product. In 2014 it released a storage appliance, but over time it has shifted more toward hybrid solutions.
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NetApp to acquire Spot (formerly Spotinst) to gain cloud infrastructure management tools
When Spotinst rebranded to Spot in March, it seemed big changes were afoot for the startup, which originally helped companies find and manage cheap infrastructure known as spot instances (hence its original name). We had no idea how big at the time. Today, NetApp announced plans to acquire the startup.
The companies did not share the price, but Israeli publication CTECH pegged the deal at $450 million. NetApp would not confirm that price.
It may seem like a strange pairing, a storage company and a startup that helps companies find bargain infrastructure and monitor cloud costs, but NetApp sees the acquisition as a way for its customers to bridge storage and infrastructure requirements.
“The combination of NetApp’s leading shared storage platform for block, file and object and Spot’s compute platform will deliver a leading solution for the continuous optimization of cost for all workloads, both cloud native and legacy,” Anthony Lye, senior vice president and general manager for public cloud services at NetApp said in a statement.
Holger Mueller, an analyst with Constellation Research says the deal makes sense on that level, but it depends on how well NetApp incorporates the Spot technology into its stack. “At the end of the day to run next generation applications successfully in the cloud you need to be efficient on compute and storage usage. NetApp is doing great on the latter but needed way to monitor and automate compute consultation. This is what Spot brings to the table, so the combination makes sense, but as in all acquisitions execution is key now,” Mueller told TechCrunch.
Spot helps companies do a couple of things. First of all it manages spot and reserved instances for customers in the cloud. Spot instances in particular, are extremely cheap because they represent unused capacity at the cloud provider. The catch is that the vendor can take the resources back when they need them, and Spot helps safely move workloads around these requirements.
Reserved instances are cloud infrastructure you buy in advance for a discounted price. The cloud vendor gives a break on pricing, knowing that it can count on the customer to use a certain amount of infrastructure resources.
At the time it rebranded, the company also had gotten into monitoring cloud spending and usage across clouds. Amiram Shachar, co-founder and CEO at Spot, told TechCrunch in March, “With this new product we’re providing a more holistic platform that lets customers see all of their cloud spending in one place — all of their usage, all of their costs, what they are spending and doing across multiple clouds — and then what they can actually do [to deploy resources more efficiently],” he said at the time.
Shachar writing in a blog post today announcing the deal indicated the company will continue to support its products as part of the NetApp family, and as startup CEOs typically say at a time like this, move much faster as part of a large organization.
“Spot will continue to offer and fully support our products, both now and as part of NetApp when the transaction closes. In fact, joining forces with NetApp will bring additional resources to Spot that you’ll see in our ability to deliver our roadmap and new innovation even faster and more broadly,” he wrote in the post.
NetApp has been quite acquisitive this year. It acquired Talon Storage in early March and CloudJumper at the end of April. This represents the twentieth acquisition overall for the company, according to Crunchbase data.
Spot was founded in 2015 in Tel Aviv. It has raised over $52 million, according to Crunchbase data. The deal is expected to close later this year, assuming it passes typical regulatory hurdles.
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Wasabi announces $30M Series B as cloud storage business continues to grow
We may be in the thick of a pandemic with all of the economic fallout that comes from that, but certain aspects of technology don’t change, no matter the external factors. Storage is one of them. In fact, we are generating more digital stuff than ever, and Wasabi, a Boston-based startup that has figured out a way to drive down the cost of cloud storage, is benefiting from that.
Today it announced a $30 million Series B led led by Forestay Capital, the technology innovation arm of Waypoint Capital, with help from previous investors. As with the previous round, Wasabi is going with home office investors, rather than traditional venture capital firms. Today’s round brings the total raised to $110 million, according to the company.
While founder and CEO David Friend wouldn’t discuss the specific valuation, he did say it was in the hundreds of millions of dollars.
Friend says the company needs the funds to keep up with the rapid growth. “We’ve got about 15,000 customers today, hundreds of petabytes of storage, 2,500 channel partners, 250 technology partners — so we’ve been busy,” he said.
He says that revenue continues to grow in spite of the impact of COVID-19 on other parts of the economy. “Revenue grew 5x last year. It’ll probably grow 3.5x this year. We haven’t seen any real slowdown from the coronavirus. Quarter over quarter growth will be in excess of 40% — this quarter over Q1 — so it’s just continuing on a torrid pace,” he said.
The challenge for a company like Wasabi, which is looking to capture a large chunk of the growing cloud storage market, is the infrastructure piece. It needs to keep building more to meet increasing demand, while keeping costs down, which remains its primary value proposition with customers.
The money will be used mostly to continue to expand its growing infrastructure requirements. The more they store, the more data centers they need, and that takes money. It will also help the company expand into new markets where countries have data sovereignty laws that require data to be stored in-country.
The company launched in 2015. It previously raised $68 million in 2018.
Note: This article originally stated this was a debt financing round. The company has clarified that it is an equity round.
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VAST Data lands $100M Series C on $1.2B valuation to turn storage on its head
VAST Data, a startup that has come up with a cost-effective way to deliver flash storage, announced a $100 million Series C investment today on a $1.2 billion valuation, both unusually big numbers for an enterprise startup in Series C territory.
Next47, the investment arm of Siemens, led the round with participation from existing investors 83North, Commonfund Capital, Dell Technologies Capital, Goldman Sachs, Greenfield Partners, Mellanox Capital and Norwest Venture Partners. Today’s investment brings the total raised to $180 million.
That’s a lot of cash any time, but especially in the middle of a pandemic. Investors believe that VAST is solving a difficult problem around scaled storage. It’s one where customers tend to deal with petabytes of data and storage price tags beginning at a million dollars, says company founder and CEO Renen Hallak.
As Hallak points out, traditional storage is delivered in tiers with fast, high-cost flash storage at the top of the pyramid all the way down to low-cost archival storage at the bottom. He sees this approach as flawed, especially for modern applications driven by analytics and machine learning that rely on lots of data being at the ready.
VAST built a system they believe addresses these issues around the way storage has traditionally been delivered.”We build a single system. This as fast or faster than your tier one, all-flash system today and as cost effective, or more so, than your lowest tier five hard drives. We do this at scale with the resilience of the entire [traditional storage] pyramid. We make it very, very easy to use, while breaking historical storage trade-offs to enable this next generation of applications,” Hallak told TechCrunch.
The company, which was founded in 2016 and came to market with its first solution in 2018, does this by taking advantage of some modern tools like Intel 3D XPoint technology, a kind of modern non-volatile memory along with consumer-grade QLC flash, NVMe over Fabrics protocol and containerization.
“This new architecture, coupled with a lot of algorithmic work in software and types of metadata structures that we’ve developed on top of it, allows us to break those trade-offs and allows us to make much more efficient use of media, and also allows us to move beyond scalability limits, resiliency limits and problems that other systems have in terms of usability and maintainability,” he said.
They have a large average deal size; as a result, the company can keep its cost of sales and marketing to revenue ratio low. They intend to use the money to grow quickly, which is saying something in the current economic climate.
But Hallak sees vast opportunity for the kinds of companies with large amounts of data who need this kind of solution, and even though the cost is high, he says ultimately switching to VAST should save companies money, something they are always looking to do at this kind of scale, but even more so right now.
You don’t often see a unicorn valuation at Series C, especially right now, but Hallak doesn’t shy away from it at all. “I think it’s an indication of the trust that our investors put in our growth and our success. I think it’s also an indication of our very fast growth in our first year [with a product on the market], and the unprecedented adoption is an indication of the product-market fit that we have, and also of our market efficiency,” he said.
They count The National Institute of Health, General Dynamics and Zebra as customers.
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Storj brings low-cost decentralized cloud storage to the enterprise
Storj, a startup that developed a low-cost, decentralized cloud storage solution, announced a new version today called Tardigrade Decentralized Cloud Storage Service.
The new service comes with an enterprise service level agreement (SLA) that promises 99.9999999% file durability and over 99.95 percent availability, which it claims is on par with Amazon S3.
The company has come up with an unusual system to store files safely, taking advantage of excess storage capacity around the world. They are effectively doing with storage what Airbnb does with an extra bedroom, enabling people and organizations to sell that excess capacity to make extra money.
It’s fair to ask if that wouldn’t be a dangerous way to store files, but Storj Executive Chairman Ben Golub says that they have come up with a way of distributing the data across drives on their network so that no single file would ever be fully exposed.
“What we do in order to make this work is, first, before any data is uploaded, our customers encrypt the data, and they hold the keys so nobody else can decrypt the data. And then every part of a file is split into 80 pieces, of which any 30 can be used to reconstitute it. And each of those 80 pieces goes to a different drive on the network,” Golub explained.
That means even if a hacker were able to somehow get at one encrypted piece of the puzzle, he or she would need 29 others, and the encryption keys, to put the file back together again. “All a storage node operator sees is gibberish, and they only see a portion of the file. So if a bad person wanted to get your file, they would have to compromise something like 30 different networks in order to get [a single file], and even if they did that they would only have gibberish unless you also lost your encryption keys,” he said.
The ability to buy excess capacity allows Storj to offer storage at much lower prices than typical cloud storage. Golub says his company’s list prices are one-half to one-third cheaper than Amazon S3 storage and it’s S3-compatible.
The company launched in 2014 and has 20,000 users on 100,000 distributed nodes today, but this is the first time it has launched an enterprise version of the cloud storage solution.
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Dell spent $67B buying EMC — more than 3 years later, was it worth the debt?
Dell’s 2015 decision to buy EMC for $67 billion remains the largest pure tech deal in history, but a transaction of such magnitude created a mountain of debt for the Texas-based company and its primary backer, Silver Lake.
Dell would eventually take on close to $50 billion in debt. Years later, where are they in terms of paying that back, and has the deal paid for itself?
When EMC put itself up for sale, it was under pressure from activist investors Elliott Management to break up the company. In particular, Elliott reportedly wanted the company to sell one of its most valuable parts, VMware, which it believed would help boost EMC’s share price. (Elliott is currently turning the screws on Twitter and SoftBank.)
Whatever the reason, once the company went up for sale, Dell and private equity firm Silver Lake came ‘a callin with an offer EMC CEO Joe Tucci couldn’t refuse. The arrangement represented great returns for his shareholders, and Tucci got to exit on his terms, telling Elliott to take a hike (even if it was Elliott that got the ball rolling in the first place).
Dell eventually took itself public again in late 2018, probably to help raise some of the money it needed to pay off its debts. We are more than three years past the point where the Dell-EMC deal closed, so we decided to take a look back and see if Dell was wise to take on such debt or not.
What it got with EMC
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Egnyte unifies its security and productivity tooling into single platform
Egnyte announced today it was combining its two main products — Egnyte Protect and Egnyte Connect — into a single platform to help customers manage, govern and secure the data from a single set of tools.
Egynte co-founder and CEO Vineet Jain says that this new single platform approach is being driven chiefly by the sheer volume of data they are seeing from customers, especially as they shift from on-prem to the cloud.
“The underlying pervasive theme is that there’s a rapid acceleration of data going to the cloud, and we’ve seen that in our customers,” Jain told TechCrunch. He says that long-time customers have been shifting from terabytes to petabytes of data, while new customers are starting out with a few hundred terabytes instead of five or ten.
As this has happened, he says customers are asking for a way to deal with this data glut with a single platform because the volume of data makes it too much to handle with separate tools. “Instead of looking at this as separate problems, customers are saying they want a solution that helps address the productivity part at the same time as the security part. That’s because there is more data in the cloud, and concerns around data security and privacy, along with increasing compliance requirements, are driving the need to have it in one unified platform,” he explained.
The company is doing this because managing the data needs to be tied to security and governance policies. “They are not ultimately separate ideas,” Jain says.
Jain says, up until recently, the company saw the data management piece as the way into a customer, and after they had that locked down, they would move to layer on security and compliance as a value-add. Today, partly due to the data glut and partly due to compliance regulations, Jain says, these are no longer separate ideas, and his company has evolved its approach to meet the changing requirements of customers.
Egnyte was founded in 2007 and has raised over $138 million on a $460 million post valuation, according to Pitchbook data. Its most recent round was $75 million led by Goldman Sachs in September, 2018. Egnyte passed the $100 million ARR mark in November.
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Moving storage in-house helped Dropbox thrive
Back in 2013, Dropbox was scaling fast.
The company had grown quickly by taking advantage of cloud infrastructure from Amazon Web Services (AWS), but when you grow rapidly, infrastructure costs can skyrocket, especially when approaching the scale Dropbox was at the time. The company decided to build its own storage system and network — a move that turned out to be a wise decision.
In a time when going from on-prem to cloud and closing private data centers was typical, Dropbox took a big chance by going the other way. The company still uses AWS for certain services, regional requirements and bursting workloads, but ultimately when it came to the company’s core storage business, it wanted to control its own destiny.
Storage is at the heart of Dropbox’s service, leaving it with scale issues like few other companies, even in an age of massive data storage. With 600 million users and 400,000 teams currently storing more than 3 exabytes of data (and growing) if it hadn’t taken this step, the company might have been squeezed by its growing cloud bills.
Controlling infrastructure helped control costs, which improved the company’s key business metrics. A look at historical performance data tells a story about the impact that taking control of storage costs had on Dropbox.
The numbers
In March of 2016, Dropbox announced that it was “storing and serving” more than 90% of user data on its own infrastructure for the first time, completing a 3-year journey to get to this point. To understand what impact the decision had on the company’s financial performance, you have to examine the numbers from 2016 forward.
There is good financial data from Dropbox going back to the first quarter of 2016 thanks to its IPO filing, but not before. So, the view into the impact of bringing storage in-house begins after the project was initially mostly completed. By examining the company’s 2016 and 2017 financial results, it’s clear that Dropbox’s revenue quality increased dramatically. Even better for the company, its revenue quality improved as its aggregate revenue grew.
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Microsoft acquires Mover to help with Microsoft 365 cloud migration
Microsoft wants to make it as easy as possible to migrate to Microsoft 365, and today the company announced it had purchased a Canadian startup called Mover to help. The companies did not reveal the acquisition price.
Microsoft 365 is the company’s bundle that includes Office 365, Microsoft Teams, security tools and workflow. The idea is to provide customers with a soup-to-nuts, cloud-based productivity package. Mover helps customers get files from another service into the Microsoft 365 cloud.
As Jeff Tepper wrote in a post on the Official Microsoft Blog announcing the acquisition, this is about helping customers get to the Microsoft cloud as quickly and smoothly as possible. “Today, Mover supports migration from over a dozen cloud service providers — including Box, Dropbox, Egnyte, and Google Drive — into OneDrive and SharePoint, enabling seamless file collaboration across Microsoft 365 apps and services, including the Office apps and Microsoft Teams,” Tepper wrote.
Tepper also points out that they will be gaining the expertise of the Mover team as it moves to Microsoft and helps add to the migration tools already in place.
Tony Byrne, founder and principal analyst at Real Story Group, says that moving files from one system to another like this can be extremely challenging regardless of how you do it, and the file transfer mechanism is only part of it. “The transition to 365 from an on-prem system or competing cloud supplier is never a migration, per se. It’s a rebuild, with a completely different UX, admin model, set of services and operational assumptions all built into the Microsoft cloud offering,” Byrne explained.
Mover is based in Edmonton, Canada. It was founded in 2012 and raised $1 million, according to Crunchbase data. It counts some big clients as customers, including AutoDesk, Symantec and BuzzFeed.
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