All posts in “M&A”

SaaS data protection provider Druva nabs $130M, now at a $1B+ valuation, acquiring CloudLanes

As businesses continue to move more of their computing and data to the cloud, one of the startups that has made a name for itself as a provider of cloud-based solutions to protect and manage those IT assets has raised a big round of funding to build its business.

Druva, which provides software-as-a-service-based data protection, backup and management solutions, has raised $130 million in a round of funding that CEO and founder Jaspreet Singh says takes the company “well past the $1 billion mark” in terms of its valuation.

Alongside this news, it’s making an acquisition to continue building out the storage part of its business (one of several product areas that it’s developing): it’s acquiring CloudLanes, a startup that was backed by Microsoft and others, for an undisclosed sum, in a deal that will likely be formally announced in early July.

The funding is being led by Viking Global Investors, the hedge fund and investment firm, with participation from two other new investors, Neuberger Berman and Atreides Capital, and existing investors Riverwood Capital, Tenaya Capital and Nexus Venture Partners (which were part of Druva’s last round of $80 million in 2017). The company, Singh said, is now nearly at a $100 million annual run rate. And although he would not disclose revenues, he said it’s now in a strong position to consider going public as its next step (or finally entertaining one of the many acquisition offers Singh admitted Druva gets).

“As we look at growth and the potential of what we are doing, the next obvious step is to look at public markets in the next 12 to 18 months,” he said in an interview.

The strong numbers (in terms of funding raised, valuation and performance) are a sign not just of Druva’s own business health, but of the opportunity it is tackling.

Spurred by a number of factors — the unfortunate rise of malicious hacking and data breaches, a massive wave of computing services that are creating mountains of data that can now be parsed for insights and a big move to cloud computing — the data protection industry is booming, with IDC predicting that it will collectively cost some $55 billion by 2020 to store and manage “copy data” (backups of the data), and that the data protection market will likely see revenues of $8 billion by 2020. Druva itself works with some 4,000 organizations today, with many in the mid-market in terms of size, with customers ranging across a number of verticals and including the likes of Build Group, American Cancer Society and Port of New Orleans — but as a measure of the opportunity, IDC notes that as of 2017 it had only about a 1% share (it doesn’t have more updated figures yet).

With a huge opportunity like this, it’s also an unsurprisingly crowded area in terms of competition. Singh points out that others looking to provide services in the same area include huge incumbents like CommVault and IBM, as well as newer entrants like Rubrik (itself on something of a fundraising tear in the last few years to capitalise on the same opportunity).

Singh notes that Druva stands out from these because it is the only one in the pack that started that remains an exclusively cloud-based, SaaS offering, meaning a company requires no hardware changes or appliance purchases in order to use it. While that’s an area that everyone is now moving into, his argument is that having started out here gives Druva a level of expertise and experience that cannot be matched by others — an important point when data protection is at stake.

The reality of today’s enterprise world is that there are a number of companies that are very far from being “in the cloud.” Despite the song and dance that we hear all the time about how cloud is the future, they are more often than not either relying entirely still on on-premises computing, or a hybrid solution. As Singh talks about it, this is almost irrelevant to what Druva is offering, and is in fact a segue to helping those companies come to trust and move more off premises, by giving them a strong example of how a cloud-based solution not only works, but can be less expensive and better than on-premise alternatives.

The CloudLanes acquisition fits in with this strategy, too: the company’s solution stack includes cloud storage that leverages on-premise data as a cache; ransomware protection; audit logs and more. “It will help us cover the gap between the data center and cloud more effectively,” Singh said.

This is also the belief that is propelling Druva to expanding into newer areas of business. Singh noted that business intelligence is going to be a big focus for the company, which makes sense: now that there is a lot of data being stored and managed by Druva, the next obvious move is to help parse it for insights. Security and making a wider move to secure endpoints are also areas that the company is considering, he said.

“We invest in companies based on a thorough assessment of their business models and fundamentals, the quality of their management teams, and cyclical and secular industry trends,” said Harish Belur, managing director, Riverwood Capital, in a statement. “Druva is doing something unique and special and, as a result, has grown at a phenomenal rate over recent years, all while keeping the trust and loyalty of its enterprise customers around the globe. We know this market is taking off and we continue to invest in Druva because we are sure it has the right product, executive team, and market execution to maintain leadership in the industry.”

I asked if companies like Amazon or Microsoft are friends, or frenemies, considering that they have a big part to play in cloud services. Singh said that so far, so good, since they are all more focused on infrastructure — or at least that’s where most of their strength has been up to now. Amazon, in particular, is a strong partner to the company he said, where Druva is often an early adopter of new tools of Amazon’s, and the AWS sales team regularly suggests Druva to customers for data protection and management services. Druva even happened to include a quote from the company in its news release:

“Druva is a leading Advanced Technology Partner in the AWS Partner Network,” said Mike Clayville, vice president Worldwide Commercial Sales and Business Development, Amazon Web Services, Inc., in a statement. “Druva’s solutions powered by AWS are changing the way data is managed and protected at thousands of companies globally. We’d like to congratulate Druva on its latest fund raise, and look forward to innovating with Druva to create new solutions that benefit our customers.”

Seems like that could be one to watch, as well, as both companies continue their cloud expansion, both independently and in competition with others.

iRobot acquires education startup, Root Robotics

In a bid to expand its educational offerings, iRobot has acquired local Massachusetts-based startup, Root Robotics. The company is the creator of the eponymous coding robot, a two-wheeled device designed to draw on whiteboards and other surfaces, scanning colors, playing music and otherwise playing out coding instructions.

We had the company at our CES stage last year, and it managed to stand out among a sea of educational ‘bots at the event. iRobot clearly sees a lot of value in the Wyss Institute at Harvard University spin-off, and will integrate the startup’s offering into its portfolio immediately.

“The acquisition of Root Robotics allows iRobot to broaden the impact of its STEM efforts with a commercially available, educational robotic platform already being used by educators, students and parents,” iRobot CEO Colin Angle said in a press release. “Root also helps increase the reach of iRobot’s educational robot line by offering a proven system for people of all ages, including students in elementary school.”

iRobot’s no stranger to STEM education. The company has long offered the Create robot — a hackable version of its popular Roomba platform — for schools. The addition of Root creates a far more accessible place for students to start, along with a clever recruiting method for future iRobot roboticists and engineers.

Root is currently available for $199. Details of the deal were not disclosed.

Echo, the medication management app, has been acquired by LloydsPharmacy-owner McKesson

Echo, the U.K. startup that offers an app to help you manage your medication and order repeat prescriptions for delivery, has been acquired by healthcare company McKesson, owner of LloydsPharmacy.

Terms of the deal remain undisclosed. However, I understand the buyout sees all of Echo’s existing investors exit, with McKesson becoming the majority shareholder and the remaining shares divided amongst Echo management and other staff. Echo was backed by White Star Capital, MMC Ventures, Rocket Internet’s GFC, Hambro Perks, Public.io and LocalGlobe.

Echo was founded in 2015 by Sai Lakshmi, who previously worked in biz dev for Apple, and Stephen Bourke, who (notably) was previously a manager at LloydsPharmacy’s online doctor service. Lakshmi stepped down as CEO of Echo in August last year and was subsequently replaced by ex-HelloFresh International COO Roger Hassan.

The Echo app for iOS and Android lets you order NHS prescriptions and get your medication delivered to your door. You simply tell the app the name of your GP and what repeat medication you take, which can be input using your phone’s camera and with the help of Echo’s NLP tech.

The app also alerts you when you need to take your medicine and when you are running low. When a new prescription is required, under your instruction Echo will send the appropriate request to your doctor and nominate a pharmacy partner on your behalf. Once approved by your GP, your medicine is dispatched by second-class post and you pay the standard NHS charge if applicable.

All of this is enabled by the way echo has deeply integrated with the NHS Electronic Prescription Service (EPS), meaning that it works with existing GP NHS England practice systems and tech, and doesn’t require extra work on the GP surgery’s part. The idea is to make medication management, especially for people who have chronic conditions and take regular medicine, as hassle-free as possible.

Meanwhile, the acquisition by McKesson creates a number of obvious and not so obvious synergies. With only an estimated 1% of prescriptions in the U.K. having moved online, the digital pharmacy market is still quite a nascent one, but it certainly feels likely that more digitisation is inevitable.

Arguably, purchasing medication online has more in common with e-commerce than healthtech, and the U.K. is one of the biggest e-commerce markets in the world. As another reference point, Amazon acquired U.S.-based PillPack roughly a year ago for just shy of $1 billion. In that sense, this deal could be seen as McKesson placing a bigger bet on digital in a bid to avoid innovator’s dilemma. Via LloydsPharmacy, McKesson has a lot of brick ‘n’ mortar stores.

However, as explained in a call with Echo CEO Roger Hassan, McKesson is very much in the pharmaceutical wholesale business, too, and is the wholesaler that Echo uses to purchase much of the medicine it dispenses. Buying medicine is Echo’s main cost, and the difference between wholesale price and how much the NHS will reimburse for a particular medication is where Echo creates margin. Now that it is owned by McKesson there are more opportunities for economies of scale.

Another aspect that will be explored post-acquisition is how best to leverage the Echo and LloydsPharmacy brands. One of Echo’s challenges over the years has been convincing customers that an app can be trusted to send vital medication through the post in time. This has meant the market needs to be created as much as competed for. A closer brand association with LloydsPharmacy (which along with a significant offline presence also has its own tentative online pharmacy), could help with this.

There may well be opportunities to drive Echo customers to LloydsPharmacy stores, too. This could include a click and collect scenario for customers who are nervous about delivery or for other services that can only be conducted face to face, such as basic tests, advice or things like quit-smoking coaching.

Catherine McDermott, chief digital officer at McKesson UK, comments in a statement: “We know that our customers are always looking for ways to make their lives easier by managing more things online. That’s why growing our digital capabilities is one of our top priorities. Our goal is to develop innovative technologies that enable us to better serve our customers and patients by providing them with added choice and convenience.”

Amazon’s Twitch acquired social networking platform Bebo for $25M to bolster its esports efforts

While Facebook makes a bold move into cryptocurrency to capitalise on its multi-billion user base, a social network that was once a credible competitor to it has quietly been snapped up by a subsidiary of Amazon. TechCrunch has learned and confirmed that Bebo, one of the earlier platforms to let people share thoughts and media with their friends, has been acquired by Twitch, the streaming video platform owned by Amazon. Together the two will be working on building out Twitch’s esports business, and specifically Twitch Rivals.

A spokesperson for Twitch confirmed the acquisition, which includes both people (around 10 employees) and IP, but declined to provide further comment.

From what we understand from our sources, Twitch paid $25 million for the company earlier this month, after beating out at least one other bidder, Discord (which itself has been building out its own esports business). Indeed, LinkedIn profiles for ex-Bebo employees — see here, here, and here — now at Twitch note June as the changeover date.

It has been a long and winding road for Bebo over the years. Starting out way back in 2005 by Michael and Xochi Birch as an early social networking site, Bebo quickly became the market leader in a couple of English-speaking countries, specifically UK and Ireland.

Bebo’s growth trajectory and the bigger opportunity in social were enough to get it acquired for about $850 million by AOL back in 2008, apparently beating out a number of other interested large tech and media companies interested in getting their own social media platform and the audience that would come with it (disclaimer: AOL eventually also acquired TechCrunch, too).

But the deal was a certifiable dud, with Bebo never managing to build on its early traction, and AOL not being in a position to know how to fix that. Less than two years later, it was sold on to Criterion Capital for $25 million.

Yet as the social wheels continued to turn, and even once-global market leader MySpace also fell back as Facebook, Twitter, Instagram and other mobile-friendly platforms pulled out ahead, even that $25 million price turned out to be too high. After Bebo filed for Chapter 11 bankruptcy protection, the original founders, the Birches, bought it back in 2013 for $1 million with a pledge to reinvent it.

And so they did, putting in place a small team led by Shaan Puri, who worked on a number of ideas to see which of them could fly. (And I don’t know if this was a tongue in cheek joke about how challenging they knew the task would be, but it seems that the holding company set up to house some of the IP and legal aspects of the endeavor was called “Pigs in Flight.”)

The new app studio effort, which went by the name Monkey Inferno (another great one), came out of the gates with “Blab”, a “walkie-talkie” ephemeral video messaging service, which picked up millions of users quickly but found it hard to retain them. It shut down a year later, and it looks like Monkey Inferno dabbled in a few other things before coming to esports.

From social networking to socialising esports

In that last pivot, Bebo first tried out streaming services for esports players, but that proved to be tough competition against dominant platforms like OBS and Xsplit. Then, in an interesting nod to its earlier history in social networking and organising groups of friends, it shifted once more, into organising and running tournaments for streamers, with leagues and more: the streams ran on Twitch and Bebo organised viewers, leagues and other things around that.

That site, Bebo.com, is now offline, and all its tweets seem to have been deleted, but the idea was to build out leagues and tournaments for any and all kinds of groups and players, for example complete beginners, or high school students.

It was the last of these that turned out to line up with a growing market segment.

According to a report in eMarketer, esports attracted some 400 million users in 2018 and pulled in revenues of $869 million from sponsorships, player fees and advertising, and it is projected to be worth between $1.58 billion and $2.96 billion by 2022. And Bebo was helping organise and build those communities.

And that is now linking up neatly with Twitch, which had been developing its own casual esports operation in the form of Twitch Rivals. This launched in beta in 2018 and is now widely available wherever Twitch is.

The Bebo tech and its team are now both being put to use on Twitch Rivals, to help continue expanding it with more features and more users. To be clear, though, it seems there is no intention — from what I understand — to parlay Bebo’s past efforts in social networking into a wider social networking play at Twitch: the focus is on esports.

Still, the acquisition comes at a key moment. Since January, there have been reports that Amazon is working on a new game streaming service (just like Apple, Google and others), which likely won’t be out until next year. While there is no news on that today, you can see how expanding the variety and breadth of content on Twitch by way of esports leagues and tournaments fits in with a wider effort to bring more regular, engaged users into the Amazon fold, using this as one of the big draws.

We’ll update this as and if we learn more.

VMware announces intent to buy Avi Networks, startup that raised $115M

VMware has been trying to reinvent itself from a company that helps you build and manage virtual machines in your data center to one that helps you manage your virtual machines wherever they live, whether that’s on prem or the public cloud. Today, the company announced it was buying Avi Networks, a 6-year old startup that helps companies balance application delivery in the cloud or on prem in an acquisition that sounds like a pretty good match. The companies did not reveal the purchase price.

Avi claims to be the modern alternative to load balancing appliances designed for another age when applications didn’t change much and lived on prem in the company data center. As companies move more workloads to public clouds like AWS, Azure and Google Cloud Platform, Avi is providing a more modern load balancing tool, that not only balances software resource requirements based on location or need, but also tracks the data behind these requirements.

Diagram: Avi Networks

VMware has been trying to find ways to help companies manage their infrastructure, whether it is in the cloud or on prem, in a consistent way, and Avi is another step in helping them do that on the monitoring and load balancing side of things, at least.

Tom Gillis, senior vice president and general manager for the networking and security business unit at VMware sees this acquisition as fitting nicely into that vision. “This acquisition will further advance our Virtual Cloud Network vision, where a software-defined distributed network architecture spans all infrastructure and ties all pieces together with the automation and programmability found in the public cloud. Combining Avi Networks with VMware NSX will further enable organizations to respond to new opportunities and threats, create new business models, and deliver services to all applications and data, wherever they are located,” Gillis explained in a statement.

In a blog post,  Avi’s co-founders expressed a similar sentiment, seeing a company where it would fit well moving forward. “The decision to join forces with VMware represents a perfect alignment of vision, products, technology, go-to-market, and culture. We will continue to deliver on our mission to help our customers modernize application services by accelerating multi-cloud deployments with automation and self-service,” they wrote. Whether that’s the case, time will tell.

Among Avi’s customers, which will now become part of VMware are Deutsche Bank, Telegraph Media Group, Hulu and Cisco. The company was founded in 2012 and raised $115 million, according to Crunchbase data. Investors included Greylock, Lightspeed Venture Partners and Menlo Ventures, among others.