Data Center & Storage Solutions

SimpliVity joins $1bn unicorns on back of hyper-convergence hyper-growth

Once upon a time the unicorn was a byword for rarity and the exotic; now you see the blighters everywhere. Not the mythological variety, obviously, but the pre-IPO companies with $1bn-plus valuations, dubbed unicorns by the media. The latest to join the club is SimpliVity, a maker of server appliances that add a host of capabilities such as storage, WAN optimisation, deduplication, data compression and backup to servers to make for what supporters describe as a “datacentre in a box”.

The buzzword to describe this meeting of technologies is “hyper-convergence” and the addition of $175m in a new funding round today takes this Westborough, Massachusetts company’s total to $276m and that totemic billion-dollar valuation.

The “unicorn” tag appears to have stuck but a better descriptor might be “billion-dollar babies”. Morgan Stanley suggests that SimpliVity is the fastest in the datacentre infrastructure space to reach the $1bn mark, after just 23 months of selling but the whole space is extremely volatile. (SimpliVity competitor Nutanix took 32 months to win a $1bn value, according to SimpliVity’s reckoning, but there is no shortage of disputes over who’s growing fastest in the sector.)

The new datacentre upstarts seem to be characterised by velocity whether you go back to Data Domain, Isilon, EqualLogic and 3PAR or the latest bunch, from Nimble Storage to Pernix Data, Pure Storage and Nutanix.

SimpliVity CEO Doron Kempel (famous in another period of his life for his involvement in a mission to rid the world of Saddam Hussein) says the company has sold over 1,500 of its OmniCube appliances to 300 companies as mid-sized and larger companies seek simplicity, performance and smaller energy footprints.

Kempel says that he has top five companies in cellular telecoms, oil and gas and consumer electronics on his customer roster and that smaller companies are standardising on running apps on his systems. The new funding will help recruit staff, especially in engineering and sales as staffing swells on the back of a $100m run-rate for revenues.

In a serendipitous encounter, the company that led the funding round, Waypoint Capital, is also a customer.

“We all have the same five problems: managing complexity, all have pressures in headcount, little time to do what we have to do, pressures on budgets, and the need to move cost structure to a business–oriented investment model,” says Fred Wohlwend, Waypoint’s chief information and technology officer.

Waypoint has previously focused largely on other areas like biotech investments but, to paraphrase Victor Kiam at Remington shavers, the company liked what it saw so much that it took a stake.

“We’re in the business of identifying visionary people with the ability to execute on ideas,” Wohlwend says. “It’s new to us but we’re interested in companies that can change the world.”

SimpliVity’s Kempel plays down the reports that HP once tried to buy his firm, saying “I’ve never spoken with any M&A representative of any vendor. We get calls of course and there’s nothing for us to talk about.”

For Kempel, VMware and Cisco are proving strong partners although there must surely be an element of the “frenemy” about these relationships as both the 800-pound gorilla of virtualisation and networking extend their respective remits. His mission, he says, is to make SimpliVity “the global leader in hyper-convergence”. If he succeeds, the new investment will be money well spent.


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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