In the red hot technology startup market, even storage is sexy.
Eight months after raising money at a valuation of more than $1 billion, Pure Storage Inc.’s price has tripled as businesses migrate to its specialty of flash storage and away from traditional magnetic disk drives. Pure said today that it raised $225 million at a valuation of more than $3 billion.
Pure becomes the fifth U.S. venture-backed technology company to collect a round of at least $200 million this year, the same number that reeled in financing of that size in all of 2013, according to data compiled by Bloomberg. Chief Executive Officer Scott Dietzen said revenue increased 700 percent last year, and the company needs more money to hire the salespeople, support staff and engineers to meet demand.
“Growth at this scale is expensive,” Dietzen said in a telephone interview. “The prudent thing to do is to seize this market opportunity that’s being handed to us.”
Pure, based in Mountain View, California, says its flash storage arrays are 10 times faster with 10-fold the space and power efficiency of disks. So when corporations using traditional storage products from EMC Corp. and NetApp Inc. are ready to upgrade, Pure goes after them aggressively, Dietzen said.
Pure uses special software loaded on its devices that can compress customers’ data so they need to buy less flash storage, which is pricier than disk-based systems.
Customers include Investec Asset Management, the National Hockey League’s San Jose Sharks and Siemens AG’s eMeter unit.
T. Rowe Price Group Inc., the mutual fund company that led Pure’s $150 million financing round in August, contributed again, along with existing investors including Tiger Global Management LLC and Greylock Partners. Wellington Management Co., an asset management firm, joined as a new investor.
“The Pure team has delivered on all their milestones and are focused on building a durable company,” Henry Ellenbogen, a money manager at T. Rowe in Baltimore, said in an e-mail.
T. Rowe is among the firms driving a wave of startup megadeals. It recently backed database software maker Cloudera Inc. as part of a $900 million cash infusion led by Intel Corp. T. Rowe also participated in recent investments of at least $100 million in online retailer Wayfair LLC and business software maker Domo Inc.
Pure was founded in 2009. Dietzen, a former Yahoo! Inc. executive, joined the following year.
While Dietzen wouldn’t say when an initial public offering for Pure will take place, he said the almost $400 million the company has raised in less than a year “either gets us to cash flow positive or gets us to a barn burner of an IPO that would fund yet more accelerated growth.”
Public market investors have also welcomed some storage companies in recent years. Nimble Storage Inc., a provider of hybrid storage that includes flash technology, has gained 60 percent since its December IPO and is valued at $2.4 billion.