Data Management Venture Funding tops $500M with M&A Remaining Active in Q1 2021

M&A Highlights:

  • Smaller M&A trades ruled Q1 2021 with total consideration of $165M across 8 deals.
  • Data protection software/SaaS trades led the quarter with 4 deals, Arcserve/StorageCraft, Rewind/BackHub, Veritas/HubStor and Hornet/Altaro
  • We expect continued consolidation in the data protection/back-up sector with larger strategics looking to build broader data protection SaaS solution suites and well-funded private companies also looking to expand their product suites and geographic reach
  • HPE, who had moved away from smaller strategic trades, picks up CloudPhysics which brings them some interesting tools for measuring IT costs and infrastructure utilization
  • Caringo, one of the early pioneers of object storage finds a home with DataCore
  • Zadara, a cloud storage platform provider picks up NeoKarm, their first acquisition but possibly not their last
  • We expect a healthy M&A market through 2021 but announced deals may possibly slowdown in Q3 as Covid vaccines are broadly distributed, restrictions are further lifted and people take some much-needed time off

Venture Funding Highlights:

  • Q1 2021 data management venture funding hits $535M, the highest quarterly total since Q1 2019 and a remarkable rebound from the low of $67M in Q4 of 2020
  • As in M&A, data protection SaaS leads the venture funding with 3 rounds totaling $270M or 50.5% of the total quarterly funding
  • OwnBackup hauled in $167.5M, followed by HYCU with $87.5M and Rewind with $15M.  With some of these larger rounds of funding, we expect the funds to be used for organic growth but also bolt on M&A trades to accelerate product and market expansion.  VCs have historically been opposed to putting funds in only to see them flow out for acquisitions but this seems to be changing as lines blur between later stage VCs and PE firms
  • Dremio, a provider of next generation data lake platforms had the 2nd largest round in the quarter, raising a $135M 4th round, bringing their total raised to $261.5M
  • We expect a healthy funding environment through 2021 with some drop in Q3 as Covid restrictions loosen and we all take some much-needed time off.  

Contact John Rotchford at john@sasillc.com for the full report.