Companies like Box and Dropbox have made the storage industry look downright sexy. It definitely helps that they have solutions that are ubiquitous. But their mega financing rounds have also been key.
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Yet sometimes the conventional wisdom may not be the right approach. And this is what Egnyte’s CEO and cofounder, Vineet Jain, thinks is the case with the storage market. “In my latest round of funding,” he said, “I could have raised much more money. But my belief is that a company must be based on old-fashioned fundamentals, not the size of your funding rounds.”
Consider that in October Egnyte announced a Series D round for $29.5 million. Investors included Northgate Capital Group, Seagate Technology CenturyLink, Google Ventures, Kleiner Perkins Caufield & Byers, and Polaris Partners.
No doubt, the round seemed a bit meager. But for Vineet, it was the right amount to pursue the next phase of his business plan. And yes, as should be no surprise, his go-to-market strategy is on the unconventional side. Keep in mind that he is no Kool-Aide drinker when it comes to the cloud. He thinks that many large customers want some type of hybrid solution, which addresses the core security concerns. So from the start, Egnyte has been built with this in mind. It provides a global view of all files – depending on permissions – regardless of the location, say on local storage, the cloud or mobile devices. “The cloud is not enough,” said Vineet.
As a result, Egnyte has been able to snag a diverse set of clients in industries that span financial services, education, entertainment, semiconductors and consumer goods. Some of the latest customer wins include Cracker Barrel, IKEA and Tommy Hilfiger (the customer count is over 40,000).
At the same time, the influx of capital will help accelerate the customer acquisition. “A big focus for the new year will be expansion with the sales force, such as investing in field sales,” said Vineet. “We will also continue to hire the best engineering talent.”
He admits that the hiring environment is pretty tough nowadays. But he is making some moves to even the playing field. “In mid-March, we will move into a new location,” he said. “We are building the office — from scratch — to make it a great place to work.”
But perhaps the most important thing is the core message of Engyte. “We want those who are believers in the hybrid approach,” said Vineet. “So far, it is resonating with top engineers.”
In fact, another advantage of not taking a huge round of capital is that there is no pressure to go public. “The fat rounds have become the ‘new normal’ in Silicon Valley,” said Vineet. “And it is crazy.”
He certainly has a good point. As seen with the disastrous IPOs from storage operators like Fusion-io (FIO) and Violin Memory (VMEM), Wall Street can be extremely brutal. Yes, being a bit old-fashioned may be a good thing indeed.
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