Pure Storage, a company that has pioneered a way to deliver solid state disk performance for a mechanical disk price, announced today it has received $225 million in Series F venture funding at a valuation of $3 billion.
Those are impressive numbers, but it doesn’t stop there. According to company president David Hatfield, Pure Storage achieved 700 percent year-over-year growth and 50+ percent sequential quarterly growth on a consistent basis. It’s no wonder venture capitalists are paying attention.
For this round, new public market investor Wellington Management Company joins T. Rowe Price Associates, Inc., and Tiger Global, which had invested in earlier rounds. Other investors from previous rounds, include Greylock Partners, Index Ventures, Redpoint Ventures, and Sutter Hill Ventures, all of which are back for another spin. The company’s total investment to date is $470 million.
What are they doing to attract this investor attention? If you aren’t familiar with Pure Storage, Hatfield says they have been able to achieve this growth by providing flash storage for data centers at a price at or below mechanical storage. In fact, the company claims that when compared to traditional disk-centric arrays, Pure Storage FlashArrays are 10x faster, 10x simpler to manage, 10x more space and power efficient, and cost less than performance disk-based arrays per GB stored. They do this by combining consumer-grade flash storage in a disk array, then using software to de-duplicate and shrink the amount of data storage requirements. As Hatfield put it, if you can have Flash storage speed for a lower cost than mechanical disks, it becomes “a no-brainer.”
The company is taking aim at the big boys of storage like EMC, HP and IBM and beating them too because, as Hatfield pointed out, it’s hard for them to make the same kinds of breakthroughs because they face the “Innovator’s Dilemma,” as defined by Harvard Business School professor Clayton Christenson in his classic book by the same name. Forced to protect their existing markets, established players are challenged to address a market irritant like Pure Storage and never go quite all in.
Meanwhile, Hatfield believes his company has at least a two-year head start and a potential $60 billion market in front of it, and it’s going to use that $255 million to continue to build on that initial success. He says Pure Storage has a three-pronged approach to this investment round. Part of it will go to R&D, part to sales and marketing and part to continue to developing its channel partner relationships.
Research and development matters in this space, and the company has to keep building on its initial product platform. Pure Storage is not a household name and as such it needs to spend on sales and marketing to raise awareness. And because its business is based on third-party channel sales, it needs to find ways to build the channel partner ecosystem.
As for the future, Hatfield says it doesn’t necessarily see going public, at least not anytime soon. The new cash infusion, he points out, makes them cash positive. He sees advantages to staying private and says they would like to push that out as long they can, because, for now at least, it leaves the company more flexibility than it would have once it went public.