365 Data Centers has raised $16 million in a Series B funding round and secured a $55 million credit facility. The announcement comes on the heels of adding a new management team and changing corporate identity.
The company said it will use the funds to grow its colocation business in top and second-tier U.S. markets, develop new data center products and expand cloud and managed services offerings.
365 Data Centers’ namesake comes from the iconic 365 Main facility in San Francisco, now owned by Digital Realty Trust. In 2012, 365 Main co-founders Chris Dolan and James McGrath resurrected the brand by acquiring 16 data centers from Equinix. Equinix was looking to divest some facilities it got through the Switch & Data acquisition.
365 acquired the facilities, seeing an opportunity to create a “national player with a local focus.” Focusing on small and medium businesses, it ditched the traditional multi-year colo contract, offering services on a month-to-month basis to better appeal to its target customers.
The company said it achieved triple-digit sales growth year over year and broke its all-time quarterly sales record by more than 20 percent.
John Scanlon, a 30-year industry veteran, joined as CEO earlier this year. “365 Data Centers brings greater flexibility and accessibility to clients through solutions that simplify colocation services to bring them more in line with cloud consumption models,” said Scanlon. "This new financing allows us to continue executing on our growth strategy, whether organically or by acquisition.
"We’ve put together an experienced management team, created a strong growth plan and delivered great results in a matter of months," he continued. "We have the faith and support of capital markets behind us, and when talent meets capital, good things happen.”
The Series B includes participation from existing investors Crosslink Capital and Housatonic partners.
Gary Hromadko, partner at Crosslink, said, “With the largest cloud market in the world and increasing cloud adoption driving data center and colocation services expansion, North America represents a great market opportunity with expected growth of approximately 15 percent this year to more than $8 billion.”
The credit facility came from Fortress Credit Corp., a Fortress Investment group affiliate. Aaron Blanchette, managing director at Fortress Investment Group, said, "In our view, 365 Data Centers is similarly positioned to succeed in the expanding data center and cloud industries. We look forward to playing a part in 365’s organic expansion and potential mergers and acquisitions, as opportunities arise.”