Hyper-convergence startup SimpliVity has achieved a valuation of more than $1 billion less than two years after shipment began for its main product, Omnicube, helping to secure a $175 million Series D round of funding from Waypoint Capital.
The Switzerland-based growth equity fund may have contributed the most to SimpliVity thus far, but it’s not the only one. Previous investors include: Accel Partners, Charles River Ventures, DFJ Growth, Kleiner Perkins Caufield & Byers Growth and Meritech Capital Partners. All told, SimpliVity has received $276 million in funding.
Omnicube provides a unified data center stack that replaces several disparate systems for storage, virtual servers, and networking. It reduces clutter and complexity and is tuned for performance and efficiency at scale.
At its core, Omnicube is a bunch of products combined into one, optimized for everything from backup and archive to primary high-performance data. Some of the promises of converged infrastructure are better system manageability, reduced costs and footprint, and improved service and performance. The need for less equipment and more change occurring through software translates into decreased staffing costs.
Waypoint certainly practices what it preaches. It has four data centers that are 100 percent SimpliVity based. The transition to SimpliVity allowed it to future proof and extend IT services, reducing the amount of servers by 30 percent while increasing computing power four times. The switch also meant Total Cost of Ownership decreased by a factor of three, according to the company’s Chief Information Officer Frederic Wohlwend in a video.
“As a customer, we experienced first-hand the transformational impact of SimpliVity’s hyper-converged infrastructure,” said Wohlwend via a press release. “After a thorough analysis of alternatives, we were convinced of SimpliVity’s technological superiority, and that its unique data architecture is years ahead of the market. When we learned SimpliVity was raising capital, we insisted on taking the lead.”
More than 1,500 of the systems have been shipped to customers such as T-Mobile, Major League Baseball, and Swisscom all looking to refresh their technology with the future in mind. So, it’s no surprise that in 2014—the year SimpliVity partnered with Cisco—revenues grew by more than 500 percent year-over-year. It now has more than 400 employees worldwide and has added resellers in 50 countries.
There are a variety of different types and combinations of converged infrastructure. Other competitors in the converged infrastructure market include giants increasingly getting into the game and pure play upstarts. Competitor Nutanix recently highlighted the promise of converged infrastructure as well as raised a $101 million round last year. Other in this arena include: EMC's VCE, HP, Oracle as well as mid-market play Nimboxx.
The round is a large one, but converged infrastructure vendors, or even hardware vendors in general, require a lot of capital. Still, big money doesn’t always guarantee success. Calxeda, provider of servers based on ARM chips, went out of business despite raising over $200 million.
IDC expects the converged infrastructure market to reach $17.8 billion in 2016, up from $4.6 billion in 2012. Gartner predicts it will grow by a 24 percent CAGR from 2013 through 2018, reaching a total of $19 billion.
“Legacy IT infrastructure is due for a shake-up and the market continues to show signs of acceleration,” said Mark Bowker, senior analyst for ESG, in a press release. “There is significant interest in, and momentum behind hyper-converged infrastructure investments. Legacy architectures packaged and delivered with ‘a bow on top’ are failing to achieve the scale and operational efficiency we are seeing IT professionals achieve with a true hyper-converged platform like SimpliVity. This is the wave of the future and the path to modern IT infrastructure.”