INTRODUCTION
This report focuses on the
software as a service market and particularly, the
online backup and storage sector. This is the first
in a series of reports targeting specific sub-sectors
of hosted applications for business. Following
reports will cover other sub-sectors including
hosted PBX, collaboration platforms, cloud content
management, email, web commerce, security, and
application software. Each of these reports will
look at the emerging players in these sub-sectors,
review the investment and M&A activity to date,
and discuss valuation metrics and the potential
acquirers. Importantly, we believe that over the
next several years, a few large consolidators will
seek to build out a full suite of offerings for
busi-ness users, particularly in the SME market, and
will thus need to acquire or build solutions across
each of the above categories. As a result, we look
this series of reports as a roadmap for players like
Intuit, J2, Verio, and others that will assemble full
suites of SaaS Applications for the SME market.
Storage and Backup: A Critical
Applica-tions for the Business Suite
The online storage and backup market presents a
lot more opportunity than meets the eye and offers
an excellent foundation upon which to build a SaaS
business targeting small and mid-sized enterprises
(SME’s). While the online storage sector may
seem somewhat crowded and ripe for
commoditi-zation, we think the space provides an opportunity
to secure a highly stable customer base upon which
a broader hosted business can be pursued. While
storage has been one of the first areas in which
SME’s have adopted a hosted solution, a range of
apps are steadily moving to the cloud. While many
of these apps are currently provided by smaller,
niche players, over time, we expect the winners to
be those who offer a full business suite of apps,
integrated to provide enhanced capabilities.
Specifically related to storage, we think several
opportunities exist. First is simply the opportunity
to consolidate a sizeable customer base in a still
rapidly growing market. A number of players have
been and likely will be successful here including
Carbonite, Itronis, and others. Beyond the core
hosted storage however, we think a broader
oppor-tunity exists within content management.
Storage – a Platform or an Application
As businesses increasingly store data in the cloud,
the need for more robust cloud content
manage-ment solutions will grow. Nearly all SMEs will
turn to some form of hosted storage and once their
data is regularly stored and accessed from the
cloud, users can benefit from broader cloud content
management solutions. These solutions will need
to be tailored to specific verticals that will allow
users to more effectively access, share and
collabo-rate on content in the cloud, rather than simply
storing their for safe keeping.
In this broader content management concept, we
think its helpful to think of online storage not as an
application but rather a platform
(PaaS), on top of
which a range of applications can be built. From
this perspective, securing the data online from
cus-tomers provides the base for a broader business
around content management. As a platform (PaaS)
on top of the data center (IaaS), the vertical
solu-tions and content management systems are then the
applications (SaaS) sold to end customers.
If one thinks of online storage as simply a form of
backup, then the business model seems less
attrac-tive due to commoditization and limitations in
differentiation. However, if you look beyond the
simple backup aspect and think about the
applica-tions that can be built around content management
such as collaboration and secure access by 3rd
parties, the opportunity looks much more
promis-ing. Companies such as eFileCabinet and Box.net
are a few examples of players that have migrated
their storage offerings to content management
solu-tions for managing and manipulating content.
Vertical Solutions Required
One of the more significant opportunities in online
storage is the need for vertical solutions. Simply
storing data on a remote server is one thing, but
adding portals, viewing technology and
collabora-tion, and access monitoring to create a robust
con-INSIDE THIS ISSUE
1. Introduction
2. Valuation Trends
3. Acquirer Landscape
4. M&A Activity
5. Venture Funding
6. Company
Land-scape:
Acronis
Box.net
Carbonite
eFileCabinet
egnyte
Itronis
VaultLogix
Others
February 2011
Redwood Capital
885 Third Avenue, 25th Floor • New York, NY 10022
www.redcapgroup.com
SaaS: Hosted Storage & Backup
Contact:
Russ Crafton, Partner
[email protected]
212-508-7110
tent management system in the cloud will require solutions tailored to
different industries. The needs of healthcare providers (doctors
access-ing patient records) is very different than needs of a tax preparer or an
attorney for storing and making available annual tax returns or legal
documents to clients.
SaaS 2.0 is About Integration
For online storage, this migration to, or integration with, content
man-agement is a typical trend in applications—the need for tighter
integra-tion. Many enterprise applications do not reach their potential until
successfully integrated with other parts of the IT infrastructure. As
these applications migrate to the cloud, that same level of integration
will be required.
Whether its data storage integrated with content
man-agement or hosted contact center integrated with CRM, while many
applications can gain initial traction as point solutions, the ability to
integrate with related applications and leverage common data and
re-sources is critical. As a result, we believe that as larger players build
out full suites of hosted apps and provide integration across those apps,
they will achieve significant differentiation that will allow them to
consolidate market share at the expense of point-solution providers
.
A Great Offering to Sell Thru the Channel
Hosted storage, like a number of hosted apps presents an excellent
prod-uct to sell through a reseller network—primarily other hosting providers
and data MSP’s. A few companies such as Itronis and Vaultlogix have
built their business models to leverage this master MSP approach,
build-ing private label and reseller programs which provide a greater ability to
ramp. For basic hosted storage and backup, we suspect that a few large
players will likely emerge, selling their offerings through channels into
the SME base. In fact, given the size of the market and challenge in
selling into the SME space, the eventual winners for basic storage will
probably have to achieve that success through an indirect sales approach.
Large Players Will Drive Consolidation
Many large players were slow to release hosted solutions, believing
that they were simply for SME’s which was not an important market
for them. However, as many SaaS based applications have quickly
grown, larger players have moved to create full suite of hosted apps for
SMEs. Just over the past year, a number of major players completed
acquisitions including Dell (Ocarina), Trend Micro (Humyo), and J2
Global (KeepITSafe). We believe that this is the beginning of a
con-solidation trend in the space that will ultimately focus on larger players
adding specific technologies or vertical solutions to enhance their
online storage and cloud content management offerings.
V
ALUATION
T
RENDS
Valuations for most SaaS and hosted services offerings are still trading
at relatively high valuations, reflective of the strong growth prospects
that must public equity investors have for the space. As shown in the
scatter plot below, SaaS companies with annual EBITDA growth of 15%
to 20% are trading at 10x to 20x EBITDA multiples. While data for
private market valuations is a little more difficult to come by, we have
found that valuations in the private markets are noticeably below the 15x
or higher EBITDA multiples at which many public players tend to trade.
While the public markets often tend to place higher valuations on
busi-nesses than the private markets, in this case, we think a great deal of the
higher public market valuations is simply due to the scale and market
leadership obtained by leading players such as SalesForce or Concur.
Given the recurring revenue of these businesses, early leaders like
Sales-Force are in a very strong position and likely to be able to maintain the
growth necessary to justify such higher valuations. Meanwhile, many
private companies are still smaller with less of a commanding position,
thus providing greater risk and a higher discount factor on future growth.
Finally, most SaaS players have fully rebounded from the market
down-turn over the past 3 years with most now trading at or above their
previ-ous stock price highs. This is evidenced in our SaaS index (see the next
page) which is up nearly 75% since January 2008.
www.redcapgroup.com
Sources: Capital IQ2
0x 5x 10x 15x 20x 25x 30x 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 20 10 T E V /E B IT D A M u lt ip le
2010-2011 EBITDA Growth Rate
Rackspace Blackboard Ultimate Software Group Taleo Websense Constant Contact Rightnow Technologies DealerTrack
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Sources: Capital IQ3
Public Comparables
Stock Price Performance
$ millions
Company Name
Market
Cap 2010E CY Revs 2011E CY Revs 2010E CY EBITDA 2011E CY EBITDA 2010E EBITDA Margin 2011E EBITDA Margin Revenue Growth '09-'10 Revenue Growth '10-'11 EBITDA Growth '09-'10 EBITDA Growth '10-'11 TEV / 2010E Revs TEV / 2011E Revs TEV / 2010E EBITDA TEV / 2011E EBITDA SaaS Salesforce.com $17,830 $1,651 $2,021 $294 $369 18% 18% 26% 22% 86% 25% 10.6x 8.7x 59.6x 47.5x Rackspace 3,839 775 942 259 324 33% 34% 23% 21% 55% 25% 5.0x 4.1x 14.9x 11.9x Concur Technologies 2,765 305 368 87 108 29% NA 19% 21% 35% NA 7.8x 6.4x 27.1x NA Ariba 2,116 362 356 80 93 22% NA 7% -2% NM NA 5.3x 5.4x 23.9x NA NetSuite 1,640 192 224 18 24 10% 11% 15% 17% -267% 32% 8.0x 6.9x 83.6x 63.6x Blackboard 1,440 447 509 108 134 24% 26% 19% 14% 26% 24% 3.4x 3.0x 14.1x 11.3x Ultimate Software Group 1,219 228 271 35 45 15% 16% 16% 19% NM 28% 5.2x 4.4x 34.1x 26.6x j2 Global Comm 1,353 254 323 131 160 52% 49% 4% 27% 9% 21% 4.4x 3.5x 8.6x 7.0x Taleo 1,153 237 293 49 60 21% 21% 19% 24% 89% 23% 3.8x 3.0x 18.1x 14.7x Websense 828 336 350 109 104 33% 30% 7% 4% 102% -5% 2.4x 2.3x 7.4x 7.8x Constant Contact 833 174 218 23 35 13% 16% 35% 25% NM 54% 4.1x 3.3x NM 20.4x Rightnow Technologies 775 184 215 25 40 14% 19% 20% 17% NM 60% 3.6x 3.1x 26.8x 16.8x DealerTrack 823 243 269 41 56 17% 21% 8% 11% 66% 36% 2.7x 2.4x 15.7x 11.6x LivePerson 553 110 133 27 35 24% 26% 26% 21% 48% 31% 4.6x 3.8x 18.8x 14.3x Kenexa 488 194 242 28 37 15% 15% 23% 25% 91% 30% 2.2x 1.7x 14.9x 11.5x Vocus 506 98 112 15 21 16% 18% 15% 15% 285% 33% 4.2x 3.7x 26.8x 20.2x DemandTec 340 79 90 3 7 4% 8% 1% 13% NM 145% 3.5x 3.1x 94.7x 38.7x Mean 21% 22% 17% 17% 52% 38% 4.7x 4.0x 30.6x 21.6x Median 18% 19% 19% 19% 60% 30% 4.2x 3.5x 21.3x 14.7x Sources: First Call mean estimates for projections; Capital IQ historical financial and operating data
Price Close 1/4/2011 Research Projections -100.00 -50.00 0.00 50.00 100.00 150.00
Index: CRM, RAX, CNQR, N, 13 more (Market Cap) - Index Value NASDAQ Composite Index (^COMP) - Index Value
A
CQUIRER
L
ANDSCAPE
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4
Acquirer Profiles
Acquirer Relevant Business Activity Strategic Rationale Intuit Software for small business applications including Quickbooks, TurboTax, Payroll, Website
builder and point of sale solutions
Perhaps best positioned to offer a suite of hosted applications for the SME business customer given its broad customer base
Very Large Base of SME customers using its software Expect continued add on acquisitions of niche SaaS applications specifically aimed at selling into its customer base.
Online storage, backup and cloud content management should be areas very actively under consideration for acquisition.
Likely to seek to own the applications it hosts as opposed to being a managed hoster
Microsoft Microsoft office is by far the most significant business application used in 90% plus of enterprises
Expect targeted applications of technologies and features to enhance its SaaS application offerings.
Microsoft Live provides a suite of hosted apps for SME customers including MSFT office, collaboration solutions, website design and hosting.
Could use a much more robust cloud content management solution for SME customers for which Sharepoint is prohibitive.
Microsoft SkyDrive aimed at storage and file sharing for consumers and SME customers. Verticalized Front ends likely left to 3rd party developers
Cisco Leading player in VoIP / PBX and contact center solutions SME customers have been an important target - look for more acquisitions of app to complement Cisco's effort to build a strong UCaaS business. Also owns webex, a leading collaboration and online conferencing platform Specific applications needed including storage / backup & recovery, greater
functionality in collaboration, and cloud content management. Through its Unified Computing System (UCS), offers a complete hardware / software
solution for the data center.
Cisco has and will likely continue to play at all layers of the stack both in the enterprise, carrier, and data center.
Amazon Has competed at the IaaS and PaaS layers through its EC2 (Elastic Cloud Compute), AWS (Amazon Web Services) and S3 (Storage Solution).
Some speculate that Amazon could move more into the SaaS (application layer) selling directly to its customers - but could create channel conflict Other IaaS offerings include payments (Flexible Payment Service), content delivery
(CloudFront), and databases (SimipleDB and Relational Database Service).
The kindle has the potential to evolve as an endpoint for a CMS for consumers that could incorporate a range of document storage and retrieval.
Google Agressively targeting cloud offerings for business including a suite of productivity applications
Offers Cloud Storage for developers, targeting Amazon's S3 storage platform. Also offers storage as part of Google Docs - but not a robust offering. Goole App Endure which provides developers with a cloud based computing environment
to develop, store and serve Web-based applications.
Also has several consumer oriented content management and file sharing solutions
Google gmail continues to gain traction and provide a solid base from which to expand a suite of enterprise apps to compete with Microsoft.
Acquisitions of technologies to create a more robust backup and recovery for Google Docs and SME focused content management could make sense.
Rackspace Broad managed hosting service offering hosted storage, application hosting, hosted
exchange and other MSFT applications.
Unlikely to make substantial acquistions of SaaS products and actually own the solutions it hosts.
Large customer base and expertise in indirect channel and strong reseller network to the SME market.
Look for applications at the PaaS and IaaS layers aimed at better integrating products and solutions for customers.
Has a hosted exchange business for SME's as well as a storage and backup offering.
VMware Leading player in virtualization. Look for acquistions aimed at expanding within the platform and layer including software aimed at enhancing its virtualization capabilities.
Owned 86% by EMC but operated on a stand-alone basis. Software around making applications available on a multi-tenancy basis could be key area of acquisition.
SalesForce Unique in its position in playing at the SaaS and IaaS layers. Look for applications aimed at enhancing its CRM offering including analytics and BI related apps.
Originally grew through its CRM application, now the dominate SaaS-based CRM product. Look for significant acquisitions to build its platform layer capabilities including new tools and solutions for developers to build applications in the cloud. IN 2007, introduced its Force.com development platform for the cloud, allowing
developers to build, test and deploy cloud based applications.
Likely moves into storage include a platform for Developers for storage related apps, similar to Amazon S3 or Google CloudStorage
Shown below and over the next several pages are short profiles
of the some of the leading potential acquirers in the online
stor-age, backup, cloud content management spaces. We’ve
at-tempted to lay out the relevant business activities of these larger
players and some of the rationale as to why they may make
quisitions in this sector. Some of the players already have
ac-tive hosted storage businesses and are candidates for acquiring
enhanced technologies, larger customer bases, or vertical
solu-tions. For others, our thoughts may be a little more speculative.
However, we believe the players below are all viable acquirers
that should be considered by sellers in this space.
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5
Acquirer Profiles (Cont.)
Acquirer Relevant Business Activity Strategic Rationale
IBM Offers a broad set of hardware and software solutions for Cloub-based offerings. Expect technology-based software acqusitions to expand its core offerings around Tivoli and Websphere and its SOA initiatives.
Leading content management player with broad range of offerings around archiving & storage, content mgmt, archiving and document management.
Despite some small app acquisitions, we expect IBM to take a partnership approach for many SaaS apps and remain focused on large enterprises Primary focus on mid-size and larger players through its iDataPlex, and sSeries and
pSeries consolidation platforms.
Having exited its laptop business and focused on large enterprises, we expect its storage efforts to focus on high end data center / private cloud.
EMC Leading storage company and majority owner of Vmware. Owns a leading Mozy, a consumer / SME online backup player.
Also acquired Documentum in a strategy of leveraging its position in data storage into the content management and collaboration space for large enterprises.
EMC could follow its strategy with Document to acquire vertical specific cloud content management players (like Box.net) to complement its SME base
Citrix Only enterprise software company with end-to-end virtualization, networking and software-as-a-service (SaaS) technologies.
Online storage and content management solution would serve as excellent complement to current cloud solutions.
Has built a large SaaS business with solutions for webconferencing (GotoMeeting), remote access (GoToMyPC), GoToWebinar, GoToAssist.
Likely to pursue a broad, horizontal play given the breadth of its SME customer base and nature of its SaaS apps currently being sold.
Dell Leading supplier of hardware and software to SME's and large enterprises. Next step in expanding hosted offerings for SMEs would be a cloud content management solution as a more elegant front end for online storage Aggressively acquiring into the services layer for both large customers (thru Perot
Systems) and SMEs (through MSP Everdream).
Recently acquired Ocarina Networks, an online storage optimization technology provider.
Already offers online backup and storage as part of its suite of cloud services.
BlackBox Large system integrator of communications and data network for mid and large enterprises.
Online storage and backup service offering could serve as a nice, core complement
Building out a managed services offering to complement integration and product resale business.
Offers disaster recovery and managed service basis.
TrendMicro Leading reseller of security solutions to the enterprise and consumer markets. Recently acquired humyo, a European online storage and synchronization service.
Has actively been building a managed services and direct resell business through acquisition.
Likely to remain focused on more broad, horzontal offerings
HP Wide range of offerings from Large Enterprise to Consumer Very actively serving the mid and large enterprise market with data center and private cloud solutions.
Had launched Upline, a hosted storage business in 2007 but closed with business within a year.
To date, has not actively built a services business for SMEs or consumers. Online storage and recovery would serve as one of several necessary components to replicate what Dell, Apple and MSFT have done.
Apple MobileMe offering provides storage, synching for iPhone, Mac, Ipad and related Apple devices.
Unlikely to make acquisition to serve the Enterprise market.
Investments in MobileMe likely preclude any major acquisitions other than technologies to complement the MobileME platform.
Seagate Much of Seagates business (consumer and SME) will migrate to the cloud and they must, and have, followed.
Owns i365, a leading online storage business. Migration to cloud presents Seagate the opportunity to move up the stack. As the
permenant repository for data, content management become a viable business line.
Verticalized solutions and content management functionality will be important ways for Seagate to maintain leadership in the storage space for SMEs. Expect to pursue higher level, content management solutions to potentially expand its offering and remain competitive.
Date Ann Target/Issuer
Deal
Value Buyers/Investors Target Description
10/29/2010 Drop.io - Facebook Drop.io, Inc. provides a platform for private media sharing through a
system of drops. It offers a private place for storing and sharing photos, video, audio, notes, and documents.
10/21/2010 keepITsafe Data
Solutions Ltd.
- j2 Global
C ommunications, Inc.
keepITsafe Data Solutions Ltd. provides online backup services in Ireland and internationally. The company offers small office, SME, enterprise, and continuous data backup services, as well as Microsoft backup, a solution to automate the Navision backup for Microsoft ERP system. It has a strategic alliance with C MS Peripherals.
7/20/2010 Squirrel Storage
Ltd. - C intas C orporation (NasdaqGS:C TAS) C intas Document Management UK Limited provides document and data storage services in the United Kingdom. The company offers hard copy archiving, document scanning, confidential document shredding and destruction, pallet and self-storage, online backup, security, and collection/delivery services, as well as records management services.
7/19/2010 Ocarina Networks,
Inc.
- Dell Inc. (NasdaqGS:DELL)
Ocarina Networks, Inc. provides online storage optimization solutions. The company’s EC Osystem technology deploys de-dupe and compression algorithms for extracting, correlating, and optimizing data. Its products include Optimizers, data storage optimization appliances; EC Oreader, a software layer for reading optimized files on storage systems; and EC Ovault, a hyper-compressed archival solution.
6/11/2010 humyo.com Ltd. - Trend Micro Inc.
(TSE:4704)
humyo.com Ltd. provides online storage and synchronization services for consumers and business owners in Europe. The company’s drag and drop technology based solution integrates into the users’ desktop environment, allowing them to access, share, store, and backup their digital content online and offline.
5/10/2010 NeoNova B.V. - OneIP BV NeoNova B.V. develops internet products, which include online backup
systems and voice over Internet protocol. The company is based in Amsterdam, the Netherlands.
3/22/2010 Data Lock Limited - Maximum Internet
Limited
Data Lock Limited provides online backup solutions for files, databases, and disk images to businesses in New Zealand and Australia. The company stores the data transferred by its clients over the Internet in its data centers, as well as enables them to restore data via downloading.
2/9/2010 Everyone.net, Inc. - Proofpoint, Inc. Everyone.net, Inc. provides software as a service messaging services for
small businesses, professionals, and individuals. It offers one_mail, a business email; one_archive for email backup, storage, retrieval, and recovery; one_storage, an integrated and secure online storage solution; and one_sync, which integrates Outlook with one_business platform.
2010 commenced a consolidation phase, evidenced by
acquisi-tions by a number of major players including Dell, Trend Micro,
J2 and Facebook. With these large players all making moves in
the space, it is likely that other large strategic players are also
seeing the need for an online storage offering. While many large
players have been building their own internal offerings, we
sus-pect that many will still seek to complement their solutions
through M&A for technology or vertical specific capabilities.
As for consolidation among smaller players, we suspect that over
the past year of so and potentially for the next 12 to 18 months,
many emerging players will find that it is simply much cheaper
to acquire new customers through the normal sales and marketing
cycles than through acquisition. As with most hosted businesses
customer acquisition costs early on can be rather low, making
acquisitions an expensive and unattractive alternative to growth.
However, as the market matures and the ability to easily grow the
top line becomes more challenging, M&A will likely accelerate.
We think that will eventually be the case in this sector where
customers are very hesitant to switch vendors. Once that market
becomes highly penetrated and the ability differentiating an
of-fering is increasingly difficult, the only significant means for
growth is through acquisition or product expansion.
Regarding the product expansion angle, we think that many
stor-age and backup players will begin to verticalize their offerings,
moving into the hosted content management area with solutions
tailored to industries such as medical, tax and services, and other
specialized industries. Players with strong offerings in an
attrac-tive vertical will become attracattrac-tive acquisition targets.
Sources: Capital IQ, Venturewire, Redwood Capital
($ in millions)
Selected M&A— 2008 - Present
M
ERGERS
AND
A
CQUISITION
A
CTIVITY
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Date Ann Target/Issuer
Deal
Value Buyers/Investors Target Description
1/26/2010 C DI Vaults Inc. - Access Information
Management Shared Services, LLC
C DI Vaults Inc. provides records and data management services. It offers online backup services; data security services, including live file management for medical clinics, veterinarians, banks, and credit unions with just-in-time retrieval; and document storage and security services.
12/31/2009 U.S. Data Trust
C orp.
- VaultLogix, LLC U.S. Data Trust C orp. provides online server backup solutions for small
to mid-sized businesses and companies, as well as remote offices of larger enterprises in the United States, C anada, Mexico, and the United Kingdom. The company’s online backup service integrates online server backup, offsite storage, archiving, and recovery. It also offers LiveVault Web management portal, a Web account for backup and restore functions.
12/4/2009 PINS, Online
Backup Services
- Backup-C onnect International B.V.
B.V. Online backup activities of PINS offer online backup services. PINS is based in Amsterdam, Netherlands.
8/3/2009 DocSafe - Backup-C onnect
International B.V.
DocSafe provides online backup services to the healthcare companies. The company is based in Eindhoven, the Netherlands.
7/10/2009 Steek S.A. 41.73 F-Secure Oyj
(HLSE:FSC 1V)
Steek S.A. develops online data management products for the individual consumers and SMEs. The company provides online storage software to telecomm operators.
10/22/2008 Slicehost, LLC and
Jungle Disk, Inc. 28 Rackspace Hosting, Inc (NYSE:RAX) Jungle Disk, Inc. provides online storage software and services. Slicehost, LLC and Jungle Disk, Inc. are based in United States.
7/8/2008 C arpathia Hosting,
Inc. - Spire C apital Partners, LLC C arpathia Hosting, Inc. provides enterprise managed hosting services for government agencies and businesses. The company offers dedicated and shared firewall packages, load balancing options, and online backup and recovery solutions; individual colocation rack spaces; rack colocation services.
6/24/2008 RISC GROUP IT
Solutions Ltd. 6.7 RISC Group (ENXTPA:RSC ) RISC GROUP IT Solutions Ltd. provides data backup and storage solutions. It offers online backup for personal computers and laptops. The company’s products also include Online Pro Server Edition, an online backup for servers and networked environments; and OnLine Pro for Macintosh OS X, an offsite data backup for Macs, servers, and network environments.
5/16/2008 ZYB Technologies
ApS
49.1 Vodafone Europe B.V. Develops phonebook solutions to provide online backup and management services for mobile content to customers in Europe, the Middle East, and Africa. The company backs up and synchronizes the contact information, calendar events, pictures, and text messages on phone to the Internet.
4/30/2008 More Group, Inc.,
MoreStor Vault Online Backup and Recovery Offering
- Vault USA, LLC MoreStor Vault is an automated backup and disaster recovery software
which offers encrypted offsite protection, rapid recovery, and enhanced security services to small and medium sized businesses.
4/22/2008 Secured Digital
Storage C orp. (OTC PK:SDGS)
2.15 - Operates as a data management and digital storage lifecycle
management partner to business and information technology operations. It focuses on providing online backup data storage solutions for critical data to businesses, law firms, government agencies, and the healthcare industry.
11/30/2007 Datascape Online
Limited - - Datascape Online Limited provides remote data backup services. It offers d–stor online backup service, a managed solution for backing up and recovering data; i-stor(business), a PC and laptop backup service that allows to backup business information held on personal computers and laptops; and i-stor (home), which automatically back up computer data to a secure off-site location.
Selected M&A — 2008 - present , continued
Sources: Capital IQ, Venturewire, Redwood Capital
www.redcapgroup.com
7
Investment activity in the online backup, storage and content
management areas has been rather active over the past several
years, despite a slow venture investment climate. In reviewing
some of the minority investments below, it is evident that there
are a wide range of players active in building out their businesses
including traditional venture backed players (Carbonite and
Oca-rina), as well as small cap players (digitiliti, SpareBackup) that
have completed small fundraises. Perhaps most interesting to
note in reviewing the list below, is the diverse range of business
models, with some players targeting specific verticals like
health-care or financial services, some going direct while others focus
on resellers, and most of course targeting SME’s.
In addition to the fundraising by smaller players shown below,
many larger strategic players have also made investments in
building their own internal offerings given the importance and
opportunity presented by online storage.
With all this investment and activity and a maturing of the
mar-ket, we suspect that investments for early stage players is
proba-bly winding down with further investment activity focused on
growth and expansion for the emerging leaders as well as some
acquisition funding to drive consolidation as the cost to acquire
new customers increases, making acquisitions a more compelling
means of growth. Finally, we suspect some leaders to also raise
funding to invest in broadening their solution offering from
sim-ply storage and backup to incorporate greater content
manage-ment functionality or tailor their solutions specific verticals.
V
ENTURE
F
UNDING
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8
Selected Venture Investments—2008 - Present
Sources: Capital IQ, Venturewire, Issuer press releases
Date Ann Target/Issuer
T r a
Amount
Invested Buyers/Investors Business Description
09/20/2010 digitiliti, Inc.
(OTCPK:DIGI) Announced 2.0 - Digitiliti, Inc. provides data protection solutions to the small to medium businesses and enterprise markets in the United States. The company offers DigiBAK services, which include online backup and recovery services that would backup and restore data on various machines in a network, including desktops, laptops, and file and print servers.
06/04/2010 Tilana Systems Corporation
Announced- - Tilana Systems Corporation provides software as a service based online
storage solutions to business and consumer PC users. It offers Tilana Reserve, a software utility and off-site data storage service that provides transparent file protection and synchronization of data; Tilana RealCDP, a backup, sync, and archive system that enables Windows servers as cloud based data center servers; and Tilana Client, which syncs, protects, and archives various content.
05/17/2010 Newline Software, Inc.
Announced 1.0 - Newline Software, Inc. develops an online backup and restore software
solution for individual and business customers. It offers Newline Exact, a cloud-based backup and restore service. Newline Software, Inc. was founded in 2008 and is based in Redmond, Washington.
03/25/2010 IASO International Holding BV
Closed - Main Capital Partners BV IASO International Holding BV, through its subsidiary, provides online backup services. The company is based in Emmeloord, the Netherlands.
02/23/2010 Spare Backup, Inc.
(OTCBB:SPBU) Announced 10.0 - Spare Backup, Inc. engages in the development and marketing of online backup solutions software and services to individuals, business professionals, small office and home office companies. Its products include Spare Backup, an automated remote-backup solution, which is designed and developed for the small office or home environment to back up data on laptop or desktop computers; and Spare Switch software that enables users to complete the transfer of personal files from one personal computer to another via a high speed Internet connection.
12/24/2009 Carbonite, Inc. Effective 20.0 Menlo Ventures; CrossLink Capital, Inc.; CommonAngels; Performance Equity Mgmt
Carbonite, Inc. provides online backup services to consumers and small business customers in the United States and internationally. It backs up user-generated content, such as photos, documents, and music on computers. The company was founded in 2005 and is based in Boston, Massachusetts.
Sources: Capital IQ, Venturewire, Issuer press releases
www.redcapgroup.com
9
Selected Venture Investments—2008 - Present
Date Ann Target/Issuer
T r a
Amount
Invested Buyers/Investors Business Description
12/21/2009 VaultLogix, LLC Closed - WestView Capital
Partners; London Bay Capital
VaultLogix, LLC provides online backup, storage, and disaster recovery services. The company also offers solutions for the support, billing, marketing, and integration of online backup for VAR’s, managed service providers, and information technology consultants.
11/25/2009 digitiliti, Inc.
(OTCPK:DIGI) Announced 1.0 - Digitiliti, Inc. provides data protection solutions to the small to medium businesses and enterprise markets in the United States. The company offers DigiBAK services, which include online backup and recovery services that would backup and restore data on various machines in a network, including desktops, laptops, and file and print servers. It also provides DigiLIBE, an information management software tool that moves and manages information objects, which are human recognized content, such as a word document or an excel spreadsheet.
11/23/2009 Ocarina Networks,
Inc. Effective 3.0 - Ocarina Networks, Inc. provides online storage optimization solutions. The company’s ECOsystem technology deploys de-dupe and compression algorithms for extracting, correlating, and optimizing data. Its products include Optimizers, data storage optimization appliances; ECOreader, a software layer for reading optimized files on storage systems; and ECOvault, a hyper-compressed archival solution.
10/19/2009 Zecter, Inc. Closed 1.5 Sherpalo Ventures; Tandem Entrepreneurs Management Services, LLC.
Zecter, Inc. develops a technology solution for people to access and store content. It offers ZumoDrive, which connects consumers to their content in various devices; and ZumoCast, a service that lets user enjoy personal video collection at home or on-the-go through applications on the iPad and iPhone, and a Web browser on any computer. The company’s ZumoDrive allows users to access various media collections, such as music, photos, videos, and documents on a computer or a smartphone, as well as provides online backup, sharing, and Web access.
09/21/2009 Spare Backup, Inc.
(OTCBB:SPBU) Announced 3.0 - Spare Backup, Inc. engages in the development and marketing of online backup solutions software and services to individuals, business professionals, small office and home office companies, and small to medium sized businesses in the United States and Europe. Its products include Spare Backup, an automated remote-backup solution, which is designed and developed for the small office or home environment to back up data on laptop or desktop computers; and Spare Switch software that enables users to complete the transfer of personal files from one personal computer to another via a high speed Internet connection.
09/15/2009 MMRGlobal, Inc. (OTCBB:MMRF)
Announced 10.0 Dutchess Capital Management, LLC
MMRGlobal, Inc. provides a suite of online personal health records (PHRs) and electronic safe deposit box storage solutions for consumers, healthcare professionals, employers, insurance companies, unions and professional organizations, and affinity groups in the United States. Its solutions enable individuals and families to access their medical records and other
documents, such as birth certificates, passports, insurance policies, and wills using the Internet.
05/21/2009 digitiliti, Inc.
(OTCPK:DIGI) Effective 0.75 - Digitiliti, Inc. provides data protection solutions to the small to medium businesses and enterprise markets in the United States. The company offers DigiBAK services, which include online backup and recovery services that would backup and restore data on various machines in a network, including desktops, laptops, and file and print servers. It also provides DigiLIBE, an information management software tool that moves and manages information objects, which are human recognized content, such as a word document or an excel spreadsheet.
02/25/2009 Ocarina Networks,
Inc. Closed 20.0 Highland Capital Partners; Kleiner, Perkins, Caufield & Byers; JAFCO Ventures
Ocarina Networks, Inc. provides online storage optimization solutions. The company’s ECOsystem technology deploys de-dupe and compression algorithms for extracting, correlating, and optimizing data. Its products include Optimizers, data storage optimization appliances; ECOreader, a software layer for reading optimized files on storage systems; and ECOvault, a hyper-compressed archival solution.
02/05/2009 Datascape Online
Limited Closed - YFM Private Equity Datascape Online Limited provides remote data backup services. It offers d–stor online backup service, a managed solution for backing up and recovering data; i-stor(business), a PC and laptop backup service that allows to backup business information held on personal computers and laptops; and i-stor (home), which automatically back up computer data to a secure off-site location over the Internet.
Sources: Capital IQ, Venturewire, Issuer press releases
www.redcapgroup.com
10
Selected Venture Investments—2008 - Present
Date Ann Target/Issuer
T r a
Amount
Invested Buyers/Investors Business Description
01/06/2009 CTERA Networks,
Ltd. Closed - Benchmark Capital CTERA Networks, Ltd. offers storage and backup products. Its products include a plug-top computing device for file sharing, data backup, and synchronization; a Cloud Attached Storage appliance, which supports two internal hot-swap SATA drives to connect additional external drives; and a plug computing device that transforms USB or eSATA hard drives into network-attached storage with integrated online backup for small offices and high-demand consumers.
09/08/2008 Carbonite, Inc. Closed 20.0 3i Group plc (LSE:III); Menlo Ventures; CommonAngels; Performance Equity Management LLC
Carbonite, Inc. provides online backup services to consumers and small business customers in the United States and internationally. It backs up user-generated content, such as photos, documents, and music on computers. The company was founded in 2005 and is based in Boston, Massachusetts.
07/09/2008 eFileCabinet, Inc. Closed 1.0 Canopy Group eFileCabinet, Inc. offers a suite of electronic document management and
online backup products and services. The company offers Concentsus Online Backup, a service for home, small business, and enterprise users to store their data in a secure and remote location; SecureDrawer, a Web-based client portal service that enables users to share files via an online repository; and document scanners.
07/03/2008 Novavisions AG
(XTRA:MONT) Closed 1.89 - Novavisions AG provides software solutions for data availability and protection primarily in Germany and the United States. It offers software, SaaS solutions, and services for local and online backup, restore, and retention of business-critical data. The company’s products include NovaNET WEB, an online backup solution for various businesses;
NovaBACKUP for smaller businesses and end users, ; HiFreezer, a system for long-term storage of data in compliance with legal regulations; and HiBack ixT, a product that provides central backup and restoration management for sites.
07/01/2008 Steek S.A. Closed 7.88 Innovacom; IDInvest
Partners Steek S.A. develops online data management products for the individual consumers and small and medium-sized businesses. The company provides online storage software to telecommunications operators. It also offers SteekR that provide a path to multi-device/media convergence to store, access, share, and run multimedia and data files with online hard drive; and SteekUP, which automatically backs up data in a secured vault through an encrypted online connection.
06/18/2008 Parascale, Inc. Closed 11.37 Charles River Ventures;
Menlo Ventures Parascale, Inc. develops and sells cloud software for servers. It offers The Parascale Cloud Storage (PCS), a software-only solution to create, manage, and power cloud storage. The company also provides video-on-demand, document archive, online backup, and video surveillance solutions. Parascale, Inc. was founded in 2004 and is based in Cupertino, California. 04/01/2008 Spare Backup, Inc.
(OTCBB:SPBU) Closed 1.51 - Spare Backup, Inc. provides online backup solutions software and services . Its products include Spare Backup, an automated remote-backup solution, which is designed and developed for the small office or home environment to back up data on laptop or desktop computers; and Spare Switch software that enables users to complete the transfer of personal files from one personal computer to another via a high speed Internet connection.
