Code42 Snares Huge $85M Series B Investment

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Code42, the Minneapolis-based developers of the Crashplan enterprise backup tool, announced a massive $85 million round today. Code42 doesn’t do them small. It has had only one previous round for $52.5 million at the beginning of 2012.

The company could have gotten more if it wanted it, according to CEO Joe Payne. “This was the amount of money we needed for the next stage of our growth,” he said. They were reluctant to take more and risk diluting existing shares.

Code42 went with two big rounds separated by several years, but this could be it says Payne. “This is the last private round we need to do. It gives us years of runway and capital to invest in our business,” he said.

The round was led by JMI Equity and New Enterprise Associates, Inc. (NEA). Existing investors Accel and Split Rock Partners also participated. Today’s investment brings the total to $137.5 million over the two rounds.

Crashplan began life as a tool for backing up your laptop, pivoted to the enterprise and has been growing fast — 100 percent year over year, according to Payne. One of the advantages of Crashplan is that it’s easy to use, and rarely requires IT intervention after it’s in place. Files are backed up automatically and Payne claims end users can restore files themselves in most cases.

The tool is platform agnostic, so it backs up even Macs and Linux machines and it backs up to the cloud, so users can recover their files from anywhere, even on a new machine. It’s important to note that backup is different from storage. You store stuff on your hard drive. You back stuff up in case something goes wrong and you need to get your files back — and Crashplan is designed to backup from laptops and mobile devices, as opposed to backing up the entire datacenter.

While cloud storage can act as a backup in some cases, that’s not necessarily its primary purpose. That means in practice that Crashplan isn’t competing with Dropbox and Google Drive so much as Druva, Datto Backupify (which is designed for cloud to cloud backup) and EMC, HP and the traditional enterprise vendors.

The company typically sees either Druva or the traditional vendors in deals, according to Payne. Customers include Intuit, Adobe, Stanford University, Lockheed Martin and Mayo Clinic.

One of the ways Code42 plans to use the money is to expand its understanding of the data that comes through the system. Like many SaaS vendors, the company collects a tremendous amount of data just by the nature of its business.

It could potentially start to root out information such as when a file carrying a virus entered the system and who opened that file or show that an exiting employee who just gave you a clean laptop, actually transferred 500 files to a private Dropbox account earlier in the week.

This kind of information moves Code42 from a pure backup and restore service into something much more valuable. Being able to access and report on the data about the backup could transform the company in significant ways.

It’s not there yet, but the plan is to move in that direction, Payne says. That could result in an entirely new set of services for IT and security admins over and above what it offers today.

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