Unlike the Snapchats of the world, Avere Systems is in no hurry to go public.
The data storage company is a nine-year-old startup, announcing today its fifth round of funding from a group of investors that includes Google Inc. The Series E funding boosts the company’s coffers by $14 million, bringing total funds raised to $97 million since the company was founded in 2008.
“We anticipate this is the last funding that we will need,” Avere VP of Marketing Rebecca Thompson told ChannelE2E. “We anticipate it will take us into 2018 and bring us into profitability.”
An IPO is not in the company’s short-term plan because Avere sees advantages to staying private longer, Thompson said. Storage competitor Violin Memory, for example, rushed the process and ultimately imploded, quickly running out of funds and ending up in bankruptcy.
“Some folks go public too soon. You need to wait until you are profitable,” she said. "You have to build a strong business plan and build a sustainable business, and not rush things.”
Staying private longer appears to be something of a trend in the tech industry. The average tech company waited 11 years before going public in 2014, according to research from Jay Ritter, a University of Florida professor who studies public markets, compared to just four years in 1999.
Charles F. McCormick, a corporate attorney in New York City who represents institutional investors as well as private companies, said there are a number of reasons a company might hold off. They may have a product or service that takes a long time to develop, they may have board members who simply do not want to go public, or they might not be ready to disclose company finances.
Moving From Hardware to the Cloud
Avere helps companies move their data to the cloud, enabling customers to run file-based applications in the cloud without making any changes to them. What sets the company apart from storage competitors, if you ask Thompson, is that the process is seamless.
“We give (customers) an easy way to move data to the cloud,” she said. “All the work happens behind the scenes, and I don’t think there’s anyone else doing that.”
When the Pittsburg-based company launched in 2008, it sold hardware products for data centers. But as cloud technology gained momentum, customers were less interested in growing their data centers and expanding their hardware footprints. Avere launched its first software-only product in 2014, and now half of products sold are in the cloud.
Google approached Avere about partnering in 2015 because it was looking to boost sales of its cloud platform within the media and entertainment market. With customers including Sony Pictures Imageworks and Illumination Mac Guff – the French subsidiary of Universal Studios that produced animated films such as “The Secret Life of Pets” and “Minions” – Avere has a large customer base in the media and entertainment industry.
Avere had officially partnered with Amazon Web Services the year prior. Not long after teaming up, Google named Avere its “Cloud Platform Technology Partner of the Year” for 2015. Avere's overall partner strategy includes cloud service partners, channel partners and alliance partners.
In addition to media and entertainment, Avere has numerous customers in the life sciences market, including Johns Hopkins University and the Centers for Disease Control and Prevention, as well as financial, manufacturing and government customers.
Avere Funding: How Will It Be Used?
The Series E funding marks Google’s first investment into Avere Systems. Google was joined by existing investors Menlo Ventures, Norwest Venture Partners, Tenaya Capital and Western Digital Technologies to raise the $14 million in funding.
The money will be used to expand the company’s hybrid cloud product offerings and fund product innovation at a time when the public cloud services market is rapidly growing. Research firm Gartner predicts the market will grow 18 percent in 2017 to $246.8 billion.
“For the last several years, we’ve been laser-focused on expanding our product offerings to help customers overcome their biggest infrastructure challenge – embracing the cloud,” Avere President and CEO Ron Bianchini said in a statement. “This latest investment is a testament to that momentum.”
In 2016, Avere grew its cloud business by 97 percent, doubling the previous year’s growth.
No new products are planned in the short term, Thompson said, but the company plans to add features and enhancements to its existing product line.