Innovations such as software-defined storage (SDS), hyper-converged infrastructures (HCI), and blockchain have investors flocking to enterprise storage startups, and this market shows no signs of slowing down.
Collectively, the 10 startups featured in this roundup have raised more than $736 million in VC funding. This total is even more impressive when you factor in two startups not included in that calculation. One of them is entirely self-funded, while the other has a unique business model and an equally unique source of non-VC funding: an ICO, or Initial Coin Offering.
According to research firm IDC, the worldwide enterprise storage market expanded by 13.7 percent year over year to just under $13.6 billion in the fourth quarter of 2017. Other research firms believe the growth rate will accelerate in the near term. Research and Markets, for instance, predicts that one fast-growing segment of the overall enterprise storage market, cloud storage, will expand to become a $92.5 billion market by 2022.
The startups in this roundup are positioning themselves to ride that growth wave, offering everything from hybrid cloud storage with smart-tiered caching to platforms intended to deliver 100 percent uptime with zero data loss after a recovery event to a system designed in a way that could enable it to become the Airbnb of distributed storage.
What they do: Hybrid cloud storage.
Year founded: 2014
Headquarters: Boston, MA
CEO: Ellen Rubin. She was formerly a co-founder of CloudSwitch, a cloud enablement software company that was acquired by Verizon.
Problem they solve: The complexity, cost, and management requirements of using secondary data centers for storage, disaster recovery (DR), and backup are a problem for resource-constrained IT organizations. From provisioning equipment to replicating data, this model leaves enterprises with too much overhead and too much sprawl to manage effectively.
The cloud offers an alternative – with the chance for consolidation, continuity and cost savings – but it’s challenging for IT to unwind existing data-center footprints and move to hybrid cloud environments without rewriting apps, making numerous copies or losing data.
Yet, this opportunity is a massive one. According to MarketsandMarkets, cloud storage is a fast-growing market that is expected to be worth $61 billion by 2022 – a 177 percent increase over 2017.
How they solve it: ClearSky Data provides on-demand primary storage with built-in offsite backup and DR as a single service. This hybrid cloud service features consumption-based pricing, so customers only pay for what they use. Businesses can also consolidate what used to be separate licenses, infrastructure and management for backup, DR and replication into one service.
ClearSky says that its Smart-Tiered Caching “optimizes data across the entire lifecycle where hot data is cached at the edge of applications, warm data is cached in a PoP” located within 120 miles of an end user’s primary data center and “all data, including cold/archived data, is stored in multiple locations in the public or a private cloud and is accessible on demand.”
Competitors include: Actifio, Dell EMC, NetApp, Nimble, Pure Storage, Veeam.
Customers include: Partners Healthcare, Highland Capital Partners, Federal Hill Solutions, Miles & Stockbridge, Barrister Digital, The Broad Institute, Special Olympics, the Diocese of Trenton.
Why they’re a hot startup to watch: With $39M in VC funding and a target market worth $25B and growing, ClearSky is well-positioned to grab a significant slice of the cloud storage market. The startup’s senior leadership played key roles in the sale of startups to Verizon and Dell, and a long list of named customers indicates that ClearSky already has a beachhead in this sector.
What they do: Hybrid cloud software and storage.
Year founded: 2013
Headquarters: Reston, VA
CEO: Naj Husain, who was previously a co-founder and CEO of AppAssure Software, which was acquired by Dell.
Problem they solve: Many organizations have been blocked from moving to the cloud due to security, data control and compliance issues. Even so, most analysts and industry pundits believe that cloud adoption will spike in the near-term. Gartner, for instance, predicts that 90 percent of organizations will adopt hybrid infrastructure management capabilities by 2020.
How they solve it: The Cloudistics platform is designed for organizations seeking the ease of use, cost benefits and flexibility of the cloud, yet must also keep sensitive data behind their own firewalls. With Cloudistics, organizations are able to scale compute, network, and storage independently and as their workloads dictate.
Cloudistics provides a virtualization platform that is delivered on an appliance that resides behind your firewall, but which is controlled from the cloud. The Cloudistics platform collapses separate compute and storage silos into a virtualized platform that can be centrally managed. Through Cloudistics’ SaaS portal end users are able to create application-specific hardware profiles to drive the best performance based on each app’s requirements.
Users can create their own templates or rely on pre-configured virtual-server and application templates for point-and-click deployments, which eliminates the need for highly specialized resources and/or public cloud architects.
Competitors include: AWS, Microsoft Azure, VMware, RedHat, OpenStack.
Customers include: Howard Hughes Medical Institute, Integreon, Atlanta Hawks, MicroStrategy, Royal Bank of Canada.
Why they’re a hot startup to watch: Cloudistics may seem to fit better under the cloud than the storage category, but the boundaries between those two spaces is rather porous, and the startup was recommended by both a customer and partner.
Moreover, with on-the-record banking and medical customers, as well as flashy ones like the Atlanta Hawks, Cloudistics is proving its hybrid cloud platform can win against incumbents. Finally, Cloudistics’ leadership team has a track record of success, having led AppAssure to an acquisition by Dell and Librato to an acquisition by Solarwinds.
What they do: Hyper-converged secondary storage.
Year founded: 2013
Headquarters: San Jose, CA
CEO: Mohit Aron, who previously co-founded and served as CTO for Nutanix.
Problem they solve: As both the volume and variety of enterprise data grow exponentially, enterprises struggle to keep up. Until recently, enterprise IT handled different use cases with separate storage solutions, each built with its own proprietary hardware, user interface and licensing model. Unfortunately, this approach led to fragmented data siloes that have become operationally inefficient and too complex to effectively manage.
Then, to move data to the public cloud, many organizations must deploy yet another silo in the form of a cloud gateway.
How they solve it: Cohesity’s storage platform transforms complex infrastructures by eliminating secondary storage siloes, such as backups, test/dev copies, files, analytics data and objects with a web-scale hyper-converged platform.
The Cohesity DataPlatform consolidates all of an enterprise’s on-premises and cloud-based secondary storage silos onto a centralized hyper-converged platform. The platform also incorporates data management functions for converged data protection, in-place analytics and copy data management to automate DevOps workflows.
Competitors include: Actifio, Commvault, Dell EMC, Qumulo, Rubrik, Veritas.
Customers include: AutoNation, Manhattan Associates, University of California-Santa Barbara.
Why they’re a startup to watch: Of the 20 finalists, Cohesity had the third-highest amount of VC funding at $160M, and they finished in the top 5 in the online voting challenge.
The startup is targeting a massive market. According to IDC, “worldwide converged systems market revenue increased 10.8% year-over-year to $2.99 billion during the third quarter of 2017.” G2M Research predicts that by 2021 the NVMe market will expand to $60 billion.
Cohesity has the leadership team, VC war chest and early customer traction to compete for a sizable chunk of that market, which is still in the land-grab phase.
What they do: Software-defined storage.
Year founded: 2013
Headquarters: Santa Clara, CA
CEO: Marc Fleischmann, who previously held the roles of SVP, GM, and corporate officer at Pixelworks.
Problem they solve: As new applications and data continue to expand at exponential rates, the rigidity and complexity of enterprise storage infrastructures have become impediments to many IT organizations, preventing them from aligning IT with business goals. While the public cloud model offers better agility and simplicity, the economics of cloud storage are cost-prohibitive for many large- and hyper-scale data environments.
Meanwhile, modern IT/development methodologies and tools, such as DevOps, containerization and orchestration are boosting IT agility, but these all exacerbate the challenge of supporting them while still relying on traditional infrastructure-centric storage systems.
How they solve it: Datera has created a software-defined storage system that the startup describes as “self-driving data infrastructure designed specifically for today’s modern hybrid IT environments.” Datera replaces rigid, infrastructure-centric enterprise storage with elastic, application-centric data services that orchestrate data at scale.
According to a Datera spokesperson, the Datera Data Services Platform’s SLO-based architecture provides “operations-free agility with enterprise-class performance and latency.” Datera’s data orchestration capabilities complement the compute orchestration of Kubernetes, Docker, Mesos, etc. By leveraging machine intelligence, the platform continuously reshapes itself to optimize performance, resilience and cost.
Competitors include: Dell EMC ScaleIO, NetApp SolidFire, HPE, Ceph.
Customers include: Packet, Vendavo, Steadfast.
Why they’re a hot startup to watch: Datera has solid VC backing, on-the-record customers, and a strong leadership team. The team’s track record as serial entrepreneurs proves they know how to lead startups to successful exits. CEO Fleischmann co-founded Rising Tide and sMeet, while CRO Flavio Santoni was EVP/GM of Engenio when it was sold for $1B to NetApp. (Santoni also previously served as CEO of Syncsort and CEO of Catalogic Software.)
Finally, getting a bit further down in the weeds, co-founder Nic Bellinger is the creator and maintainer of LinuxIO SCSI Target.
What they do: Open converged infrastructure for hybrid clouds.
Year founded: 2012
Headquarters: Sunnyvale, CA
CEO: Brian Biles, who previously co-founded Data Domain, which was acquired by EMC.
Problem they solve: Many enterprises have moved away from traditional array-based infrastructure to hyper-converged infrastructures (HCI) because HCI is a more affordable way to scale application performance. However, to fully adopt it, forklift upgrades are required, which is a non-starter for most enterprises.
Moreover, network overhead, cluster sprawl and existing investments in separate backup infrastructure prevent modern data centers from adopting HCI outside of small, single-use-application deployments.
How they solve it: Datrium provides an HCI-like system for VMware- and Linux-based hosts. Enterprises deploy Datrium behind the firewall on either pre-loaded Datrium servers or they can install the software on their own servers. Datrium users also receive Datrium data nodes, which are durable capacity appliances for data retention and protection.
Like HCI, Datrium’s system overcomes the array controller bottleneck/upgrade problem in a way that scales automatically. Datrium integrates HCI features with scale-out backup and cloud-based disaster recovery.
With host-availability management and provisioning flexibility, end users may separate performance nodes from capacity nodes using any third-party servers. Additional features include VM backup and cloud data management. The end result, according to the startup, is that enterprises can now afford to scale low-latency, mission-critical workloads in a distributed fashion.
Competitors include: Dell EMC, HPE, NetApp, Pure Storage, Nutanix, VMware VSAN.
Customers include: Neovera, Northrim Bank, San Francisco Public Utility Commission, Siemens, University of Maryland.
Why they’re a hot startup to watch: Backed by $110 million in VC funding, Datrium has the war chest to compete with and often beat storage incumbents. Datrium has a long list of on-the-record customers from a variety of market sectors, and the startup did well in our online-voting round.
Datrium’s strongest asset, though, is its senior management team, which played key roles in several splashy exits. In 2009, CEO Biles helped lead the sale of Data Domain to EMC for $2.3B. In 2010, CMO Craig Nunes was VP of Marketing and Product at 3PAR when it was acquired by HP – after a bidding war with Dell – for $2.4B, and CFO Dave Clay was Controller at Pure Storage, which exited with a $4B IPO in 2015.
What they do: Enterprise File Sync and Sharing (EFSS) platform.
Year founded: 2012
Headquarters: Austin, TX