Zes, zir, zank you, zir: Zerto zucks in 50 zillion zucks in zenture zapital
The Veeam of DR keeps zooming along
+Comment Startup Zerto has picked up $50m in a fifth round of funding.
Zerto's main product is Zerto Virtual Replication which protects, migrates and recovers applications in cloud and private virtualized data centers; think of it, crudely, as the Veeam of replication. It also has a Cloud Continuity Platform to protect and move virtualized workloads between public, private and hybrid clouds.
Total funding stands at more than $110m, with the previous round being a $25m D-round in June 2014. That cash was going to be used for global business footprint expansion, R&D on hybrid cloud-based technology and to maintain long-term independence.
Eighteen months later the new cash is needed to "support continued product development to increase the flexibility of software defined, hybrid cloud infrastructures for easier adoption and use." IVP led the financing round, which included new investor, Access Industries, and participation from all current investors: 83North, Battery Ventures, Harmony Partners, RTP Ventures, US Venture Partners, and Mark Leslie who also serves on Zerto's Board of Directors.
Zerto's breakneck sales growth is slowing; it was zooming along at 200 per cent year-on-year in late 2014, whereas now it is described as more than 100 per cent annually, impressive enough by anyone's standards, and consistent at that level or more for the past four years. At this point it has 2,200 customers in financial services, healthcare, insurance, legal and education, and a channel of 250 cloud service providers and 900 resellers.
It has an EMEA sales team dedicated to the DACH region (Germany, Austria, Switzerland), and additional teams in Sweden and other locations in Europe. Zerto has continued to build out its business in China, Japan, India, Australia and New Zealand (ANZ).
Zerto is growing because its replication-based disaster recovery and business continuity products work on a base of virtualized servers and are vendor-agnostic. Its product technology is increasingly seen as a horizontal application that doesn't need to be owned by any particular storage hardware, hypervisor or cloud vendor.
The company can be seen like this; in a transport system where established vendors build roads, cars, and trucks and operate fuel stations, Zerto sells the equivalent of traffic lights, which enable traffic to keep moving at junctions. You don't buy traffic lights from existing road-builders, vehicle manufacturers or fuel station building and operating suppliers.
There's no specific word about expanding Zerto's global footprint further. It seems to us that $50m for product development is, to say the least, a fair chunk of change. It's hard to understand what kind of product development effort in this now 5-year-old company needs $50m ploughed into it.
It does say the cash "will allow Zerto to continue the momentum it has built" with the 2,200 customers, 900 resellers, etc. That suggests that Zerto's global footprint of offices is not yet self-supporting and cash burn continues. We reckon it's not yet profitable, but neither is it threatened much by any competition, and sees itself capable of growing at the 100 per cent annually level for more years yet. The cash is therefore to fund product development and to keep its global sales and support infrastructure operating, and growing – we're convinced of that – until it becomes self-sustaining.
An IPO might be possible in 2017/2018 we think. ®