The dawn broke this morning on two significant announcements from SolidFire. The first is the launch of our new SF2405 and SF4805 systems, which further strengthen the cost advantage of flash over legacy disk systems while lowering the entry point of SolidFire’s systems under $100K for the first time. Read Jay’s blog post for more on that announcement.
The second announcement is SolidFire’s $82 million Series D funding round, led by Greenspring Associates along with Silicon Valley Bank and a major sovereign wealth fund, with participation from existing investors NEA, Valhalla Partners, Novak Biddle Venture Partners and Samsung Ventures. This round puts SolidFire’s total funding at $150 million, more than was raised by virtually all of the previous generations of public storage companies.
The tremendous investor interest in our funding round was driven by both SolidFire’s strong execution over the past year and our market-leading vision for capitalizing on the two biggest waves of change in the storage market today. Firstly:
The shift from spinning disk to flash for primary storage
This shift is rapid and accelerating, and SolidFire delivers the largest, fastest and most feature-complete all-flash array in the market today. A few weeks ago we ranked as the Top Solid-State Array in Gartner’s 2014 Critical Capabilities study, due in no small part to our early recognition that flash is no longer a differentiator in and of itself. The tsunami coming behind it will make the flash wave look like a ripple in the pond.
What makes SolidFire truly unique is our ability to not only deliver flash performance for today’s applications, but to provide customers with a platform that lets them tackle the biggest challenges of that next wave …
The shift from a siloed, hardware-oriented data center to a shared, software defined data center (SDDC)
The Next Generation Data Center demands more from storage, and those demands can only be met with a true shared-nothing scale-out architecture, Guaranteed Quality of Service (QoS) and a fanatical focus on efficiency and automation. SolidFire is the only flash storage architecture designed with the DNA of the cloud at its core, which is why it’s no wonder we power many of the largest public and private clouds in the world.
This new funding will allow SolidFire to continue our rapid growth, which was over 700% last year and over 50% quarter-over-quarter this year. However, it’s important to note that while we are investing in growth, we are focused on sustainable growth, that is, growth that leads to increased profitability rather than simply an increase in revenue with ever-increasing losses.
With the frothy private company valuations in the market today, we could have raised significantly more than $82 million. In fact, the round was heavily over-subscribed and we turned away many great investors.
So why not raise even more? Raising money you have no plan to spend just dilutes existing employees and stockholders and reduces the amount of equity available for new hires. Spending money on growth that isn’t sustainable (and there are plenty of companies doing that today) just digs a deeper hole to get out of later.
Mark Andreessen, Bill Gurley and others have rung the warning bell recently on high burn rates and the risk created by a dependence on ever-increasing valuation. And while Wall Street is tolerating unprofitable growth today, that approach has always struggled to endure over any length of time. As the pendulum swings back to the middle, companies that are still burning deep holes won’t likely find a receptive audience to their IPOs.
We think our customers and employees will appreciate our focus on the long-term and on sustainable growth.