Nutanix released numbers this week that establish the startup as the far-away leader in the young hyperconverged storage market. The big news is it closed a massive $101 million funding round, which nearly doubles competitor SimpliVity’s impressive $58 million round from late 2013.
Although Nutanix’s funding round comes up short of all-flash array Pure Storage’s $150 million round from last August, it does raise the startup’s valuation to close to $1 billion. Nutanix also said it has passed $100 million in revenue in two years had has 13 customers who have each spent more than $1 million on its products – impressive numbers for a startup, especially when overall storage sales dipped in 2013.
Nutanix’s Virtual Computing Platform combines storage, servers and hypervisor in one box. The storage includes solid-state as well as hard drive. Its customers include eBay, Toyota and McKesson.
With $172.2 million in total funding and rapid sales acceleration, the round will likely be the last for Nutanix. The startup is weighing options to go public. The money also gives Nutanix a war chest to battle current and new competitors, including VMware.
“We wanted to raise enough to get us to the next major milestone, which is likely an offering in the public markets,”said Howard Ting, Nutanix vice president of marketing. “We also wanted to fuel the business. We’re seeing tremendous demand for our product.”
Ting said the funding will help Nutanix beef up its international sales team. He said the startup has sales presence in at least 20 countries but will look to put more reps in most of them. Around one-third of its sales have come from outside the United States, which is also unusually high for a U.S.-based startup.
Nutanix will also look to expand its products’ capabilities, adding analytics, the ability to connect to the public cloud and customer services. Last year, Nutanix added software deduplication for primary storage and this month went GA with support for Microsoft Hyper-V to go with its VMware and Citrix XenServer support.
Ting said he expects the IPO to come within a few years. “We don’t want to put a timeframe on it,” he said. “We want to build a company of lasting value, and an IPI will be one step in the journey to build the next iconic tech infrastructure company. We want to build the next VMware or NetApp. The IPO is not the end goal for anyone here.”
NetApp and VMware are also competitors for Nutanix, although VMware remains more of a partner than a competitor now. Ting said Nutanix almost always goes against legacy storage vendors such as NetApp, EMC, Hewlett-Packard, Dell and IBM rather than other hyperconverged startups.
VMware is preparing to enter the hyperconverged market with its Virtual SAN (vSAN) software that pools capacity from ESXi hosts. vSAN is in beta, but is seen as a future competitor to the hyperconverged products on the market.
“We appreciate and respect VMware,” Ting said. “But the [vSAN] product’s not ready yet, it’s not even shipping GA. When it does ship, limitations around scalability and ease of use will prevent it from being widely deployed. It will take them a couple of years. And then, how do they deal with the potential conflict with [VMware parent] EMC? When we displace EMC, EMC can’t do anything about it. But when a VMware sales rep sells vSAN instead of EMC VNX or VMAX, how will that work? We see VMware positioning VSAN for VDI and small organizations.”
Riverwood Capital and SAP Ventures led the Nutanix funding round, with Morgan Stanley Expansion Capital and Greenspring Associates participating as new investors.