Q1 2015 Storage M&A and Funding Highlights

Q1 2015 M&A was HOT with 7 deals and more than $600M in total consideration while funding started the year off strong with $363M from 9 rounds, with a continued focus on later stage start-ups.  Highlights from the quarter include:

 

– J2 Global dominates Q1 M&A representing 4 out of the 7 announced transactions

– The largest Q1 2015 deal was Avago Technologies’ $606M all-cash acquisition of Emulex, a provider of network connectivity, monitoring, and management

– Another notable transaction is WD/HGST’s aggressive move into object storage with the acquisition of Amplidata.  This transaction follows the Red Hat purchase of open source object storage provider Inktank last year. There is likely to be more M&A in this sector as leading storage providers look to build competing object storage offerings against Red Hat and WD.

– Q1 2015 Storage related funding started the year off strong with $363M from 9 rounds, with a continued focus on later stage start-ups.  Q1 2015 funding was comparable to Q1 2014 with $333M from 8 rounds with an average round size of $41.6M. 

– Q1 2015 funding was elevated by Simplivity’s $175M round, which was more than all its previous rounds combined and more than double its last round of $58M.  Simplivity appears to be following the example of Cloudera and Pure Storage which raised substantial private rounds that equated to the proceeds that were traditionally generated from an IPO. 

 

 

2014 Storage Market Review

“A Record Year for Venture Funding and a Solid Year for M&A”

After two strong years of venture funding and M&A in 2012 and 2013, there was general consensus that the market would cool down in 2014.  After two $1B dollar venture funding years, we would see figures drop back to $800M or possibly lower.  M&A would stay active but 20 to 25 transactions seemed like a reasonable forecast.  Well, we ended up with a record $2.3B in venture funding and M&A topped out at 31 deals worth $3.2B in consideration.  There was not one “hot” segment but rather a broad range technologies, products and business models supported by M&A and venture funding.   The current consensus is that the market is not going to slow down in 2015 and that we are still in the early days of significant technology innovation and market disruption.  Will 2015 match the current market sentiment?  Our take is that M&A will be strong in 2015, driven by the incumbents renewed appetite for early stage companies and that venture funding will pull back closer to $1B, unless we see more $900M rounds like Cloudera.  Highlights include:

2014 finished with a total of 31 deals, up 24% from 2013.  Total consideration in 2014 was $3.2B, significantly less than 2013, 2011, 2010 and 2006 due to the lack of mult-billion dollar deals and the lack of +$100M deal

Of the 31 deals in 2014, 24 were technology focused with a median deal size of $23M and a price to revenue multiple of 6.0X.  The remaining 7 transactions were business focused with a median deal size of $355M and a price to revenue multiple of 2.9X.

2014 storage related venture funding was at an all-time high at $2.4B, led by Cloudera’s $900M 6th round, Pure Storage’s $225M 6th round, and Box’s $150M Later round.

Q3 2014 Storage M&A and Funding Highlights

Q3 2014 Storage M&A and Funding remained strong!

M&A remained healthy with 9 transactions totaling roughly $500M in    consideration – 7 of the transactions were strategic technology based transactions, one business based deal (Sepaton/HDS) and one divestiture (CA Arcserve/Marlin Equity)

Acronis came back on the M&A radar acquiring Backup Agent and nScaled

SASI is advised C2C Systems in the sale to Barracuda, their first transaction as a public company

Other notable deals include Microsoft acquiring Inmage and EMC acquiring TwinStrata

Storage related funding was strong with 18 rounds totaling $546M – Box and Nutanix led the quarter with $150M and $140M rounds respectively

Similar to Q3 2013, Systems accounts for the most of the funding in Q3 2014 – Systems funding included flash/SSD players Pure Storage, PernixData, Skyera, and new comer NVMdurance and converged systems from Scale Computing and Nutanix.

Object storage funding was secured by later stage start-ups Amplidata and Caringo.

Cloud funding remained hot with Platform9, Nasuni, Cloudian, Box and CTERA.

There was venture funding across a wide range of technologies and disruptive     business models demonstrating that this segment has more “Flash” than just flash based systems and is likely to remain relevant and active into the foreseeable    future.