Wasabi Technologies, which develops a hot cloud storage alternative to Amazon Web Services (AWS), has closed a $30 million financing round led by Forestay Capital, the technology innovation arm of Waypoint Capital, with participation from Wasabi’s previous investors. With today’s round, Wasabi has raised a total of $110 million.
At first glance, Wasabi's business model attempts to achieve the impossible -- competing on price against AWS Simple Storage Service (S3), Microsoft Azure and Google Cloud Platform (GCP) storage. But take a closer look, and customer momentum suggests Wasabi has apparently developed a better, lower cost, faster approach to cloud storage. As a result, MSPs increasingly leverage Wasabi as a cloud storage system for backup platforms like Veeam, Arcserve and others.
Interview - David Friend, Wasabi Co-founder and CEO: Friend explains the company's technology, MSP partner strategy and business momentum in this ChannelE2E video interview, conducted on May 26, 2020.
In a prepared statement about the funding, Frederic Wohlwend, managing partner of Forestay Capital, said:
“In just three years, Wasabi has harnessed the complex technology that powers its storage and built a strong distribution channel in record time. Technology decision-makers don’t want to be locked into a single cloud ecosystem — they want choice, and Wasabi is empowering them to choose limitless storage at an unbeatable price. We are proud to be leading this financing round, and excited by the company's future prospects."
Wasabi Cloud Storage: Business Background, Partner Momentum
Wasabi, founded in 2017, has grown to support more than 2,500 channel partners worldwide. More than half of the company's U.S. momentum comes from partners, and the company is 100 percent channel in both Europe and Japan, Friend tells ChannelE2E.
Those partners play a big role in Wasabi's growth. The company's revenue surged 5X and its customer base surged to nearly 14,000 organizations in 2019. What's driving the momentum? Wasabi has a predictable pricing model that is one-fifth the cost of legacy cloud storage offerings with no fees for egress or API requests, the company asserts.
Armed with the new funding, Wasabi plans to extend its hot cloud storage service to Canada and additional markets in Europe, APAC and Latin America through MSPs and other channel partners, the company says.
Wasabi: Profitable Business Model?
Admittedly, competing on cost in the technology market -- especially against massive cloud services providers -- isn't for the faint of heart. Hardware giants like Dell Technologies and Hewlett Packard Enterprise, and telco service providers like AT&T and CenturyLink all abandoned the own public cloud services platforms years ago when AWS and Azure reached their tipping points.
So how can a venture-backed startup like Wasabi hope to maintain a pricing edge, build a partner program and generate profits while competing head-on against the entrenched cloud giants? In that ChannelE2E interview, Friend described how Wasabi's technology is designed to deliver a lower-cost alternative to entrenched file systems. He also notes that the Wasabi team has experience building profitable businesses in commoditized markets. Indeed, the company's team includes multiple Carbonite veterans.
Carbonite, co-founded by Friend in 2005, pioneered consumer cloud backup services before moving into the SMB market and embracing MSPs. Carbonite launched an IPO in 2011, and was acquired by OpenText in 2019. Fast forward to present day, and Friend appears on track to disrupt another market.
Still, it's difficult to fully quantify Wasabi's business momentum. As a privately held business, Wasabi doesn't disclose its profit or loss figures. With that caveat in mind, ChannelE2E will be watching closely to see if Wasabi can scale its business and partner program in a profitable, sustainable way.