Avere Systems, a hybrid cloud data storage company based in Pittsburgh, has closed a $14 million series E round of funding from new investor Google, in addition to existing investors Menlo Ventures, Norwest Venture Partners, Lightspeed Venture Partners, Tenaya Capital, and Western Digital Capital.
Founded in 2008, Avere Systems helps enterprises establish a system that blends on-premises and public cloud data storage, and offers a mix of software and hardware-based services. While countless companies have already migrated to the cloud, enabling a scalable data storage system that grows and contracts based on demand, there are benefits to keeping some things “in-house” — it enables faster data-transfer speeds, for starters, and it can often be better for privacy. So with “hybrid,” some tasks can be managed on-premises, while other tasks — particularly ones that may require significant computer resources — can be managed in the public cloud.
A recent report by Gartner suggested that the global public cloud services market alone would grow to nearly $250 billion in 2017, a rise of 18 percent.
Before now, Avere had raised $83 million, including $15 million back in 2009, $17 million a year later, and its last tranche of $20 million back in 2014. Its latest cash influx will be used to “expand the company’s hybrid cloud product offerings so that more organizations can easily take advantage of the public cloud,” according to a company statement.
“For the last several years, we’ve been laser-focused on expanding our product offerings to help customers overcome their biggest infrastructure challenge — embracing the cloud,” explained Ron Bianchini, president and CEO of Avere Systems. “In 2016 alone, Avere has grown its cloud business by 97 percent, nearly doubling growth from the previous year, and closed the year with cloud offerings driving close to half of our annual bookings. This latest investment is a testament to our momentum, the strength of our partnerships, and the hard work our team has dedicated to delivering innovative solutions.”
It’s worth taking a closer look at the investors in this round, too. Notably, Google Inc., as opposed to its dedicated investment arms GV (Google Ventures) and CapitalG (Google Capital), invested directly in Avere Systems. Google itself isn’t renowned for its direct investments, though it does have some form on that front — it has previously invested in SpaceX, Magic Leap, Zynga, Tesla, and about 50 other companies. For context, GV has made around 470 investments, and CapitalG has made around 35 investments — but the latter was only set up in 2013.
That Google has elected to invest directly in Avere Systems, rather than channeling the funds via one of its VC arms, suggests that Google isn’t primarily motivated by direct financial gains through holding equity in Avere — that is what its investment divisions are for. Instead, it sees a direct and immediate synergy between the two companies.
Indeed, Google is competing against some titans in the cloud computing space, including Amazon and Microsoft, while Avere Systems already supports the Google Cloud Platform (as well as Amazon Web Services) as part of its hybrid cloud offering. This partnership has been in place since 2015, and the following year Avere was actually named Google’s top Cloud Platform technology partner, highlighting the close-knit technical integrations between the two companies.
Investing in a close technical partner could be a way for Google to gain some influence over the future direction of Avere as Google looks to support the hybrid cloud with many of its own enterprise clients. Or, somewhat less likely, it could be a precursor to an acquisition. But most importantly here, the investment serves as a timely reminder of the importance of the cloud in Google’s business strategy.
It’s also worth noting that data storage giant Western Digital also participated in this round via its venture capital arm, having led on the $20 million funding round from 2014. Again there are deep synergies between Western Digital and Avere Systems, so there is scope there also for closer ties in the future.