HYCU, which develops multi-cloud data protection and Backup-as-a-Service technology, Thursday said it has closed its B round of funding to the tune of $53 million. However, with the A round of funding worth $87.5 million the Boston-based company closed just 12 months ago, the new cash was not critical, according to HYCU founder and CEO Simon Taylor.
Instead, the fact that HYCU’s A round investors reached out to HYCU about a second round showed confidence in the company, Taylor told CRN. Even more significant, he said, was the addition of Cisco and Atlassian as strategic investors. Atlassian, he said, can use its experience to help HYCU develop its product-led growth strategy, which is a way to let the features and performance of the software to do the selling. And, he said, Cisco’s Intersight platform strategy dovetails with how HYCU is approaching the market.
That’s not to say that Taylor is ignoring the possibilities presented by the new infusion of cash. He said HYCU will continue to invest in customer success, which includes paying close attention to customers’ problems. HYCU will also invest in its “disruptive” SaaS data protection platform, he said.
“We’re going to be launching in two months’ time,” he said. “And there’s a lot more to come around what HYCU’s going to be doing to really revolutionize the world of SaaS data management.”
Finally, the new funding puts HYCU in a great position to run hard toward an IPO, Taylor said.
“That’s certainly the goal,” he said. “We’re not really setting a timeline right now. But I will say that our ARR [annual recurring revenue] for last year grew 150 percent over the year before, and we’re going to grow more than that this year, and we’re really excited about it.”
Here’s more of what Taylor had to say about HYCU’s plans.
How would you describe HYCU to someone not familiar with the company?
We’re the fastest-growing Backup-as-a-Service company focused on data resiliency, which means automated data migration, Disaster Recovery as a Service, and backup and recovery for a hybrid multi-cloud world.
Now define ‘fastest-growing.’
Well, I think we’ve gone from about 1,000 customers to 3,100 customers in 78 countries in a little over a year. So I think our ability to add new customer logos, I think our ability to grow our revenue, and certainly I think our ability to add significant funding from great sources, all of these lead to a super-high-growth kind of rocket ship business. And not to mention that we hired 146 people last year, and we’re going to hire another 100 people this year as well.
Is it hard to find the right talent?
I’ll tell you, the market was a lot more competitive two weeks ago than it is today. We’re certainly seeing the shift of the economic downturn start to come to grips with the technology hiring.
What is HYCU’s relationship with the channel?
Our commitment to the channel has never been stronger. There are three major pillars of our channel strategy right now. The first is cloud service providers. The second is MSPs. And the third is our traditional channel. And I think in all three of those, our new funding is going to be a big boon. We’re going to continue to invest in our channel relationships. We’re going to continue to invest in making sure that our multitenant software and services are available to every channel partner across the globe. And we’re going to look to deepen some of those channel partnerships a great deal in the months to come.
Please tell us about the new funding round.
We closed an $87.5 million A round about 12 months ago. We have just closed on a $53 million B round, which brings our total haul for the last 12 months to $140 million. So that’s great. I wasn’t looking for the money, to be honest. The nice thing about the round is that [Acrew Capital founding partner] Theresia Gouw led it. She reached out and said, ‘Look, we raised a new fund, we love your performance, we’d like to increase our investment in HYCU.’ So I love seeing that from an existing investor. Loved it even more with Bain [Capital] saying, ‘Look, we’ll come back in as well.’ So that was all good news. And obviously, with the current macroeconomic environment, I think it’s going to make sense to fill your war chest and make sure you’re ready for the road ahead.
But then it gets even more exciting. Because then we got a call from Atlassian. And Atlassian said, ‘You know, we hear that you guys are offering this SaaS platform that‘s really disrupting the data protection industry.’ And I said, ‘Well, how did you hear that?’ We had a great conversation. But long story short, Atlassian, sort of the godfathers of PLG [product-led growth], became the first strategic investor in HYCU. And concurrently, Cisco reached out to us and said, ‘Look, we love what you‘re doing with multi-cloud.’ Cisco said, and you can see it in the press release, that they have a SaaS management framework or platform they call Cisco Intersight. And they said, ‘You guys, you’re bring-your-own storage, you’re platform-agnostic. You’re just the kind of company we want to invest in.’ And so, we ended the round with Bain, Acrew, Cisco and Atlassian, all coming in for a grand total of $53 million.
You say you really didn’t need the money. So how much money did does HYCU have right now on hand? And would that have been enough to gotten you through to profitability otherwise?
So here’s what I’ll say. We‘ve been running this company a little bit differently than some of our competition. We’ve always been a very low-burn kind of business organization. And because of that, we took that massive A round, and now that B round as well, for a grand total of $140 million. And I think that combined, we now have not only the money that we need, but we also have money that will enable us to further grow our organization and scale our business in a really, really well executed way.
And there’s a couple of ways that we’re going to do that. I think the first is, we’re going to continue to invest in customer success. We have a 91 NPS [Net Promoter Score] score and a net customer retention rate of 135 percent. HYCU has proven again and again that it’s the customers that matter. And I think the more that we remember that, and the more that we focus our attention on our customers’ problems, the better we’ll do. The second thing we’re going to invest in is what we call the world’s most disruptive SaaS data protection platform. We’re going to be launching in two months’ time. And there’s a lot more to come around what HYCU’s going to be doing to really revolutionize the world of SaaS data management. And so I think there’s some very, very exciting announcements to come. This funding certainly puts us in a great position to run hard towards an IPO.
So what’s planned in the SaaS data management area? Give us a little teaser, at least.
Here’s what I’ll say. If you look back 10 years ago, you know that data really existed in only five to 10 different application silos per company. That was in physical servers or in virtualized environments, maybe a mainframe, maybe they’re using Salesforce. But today the average midmarket, forget about enterprise, the average midmarket company has their data in 73 different application data silos, while in the enterprise it’s 175 silos [according to the Okta Business at Work Study].
We’ve also done our own internal analysis and even HYCU, just us alone, we have our data in over 70 different application data silos. So I think when you start to look at this, what you realize is that the old model of one data protection vendor is going to build backup for every source, it just breaks. It doesn’t work anymore. And so I think what HYCU has been able to do is expand on its HYCU Protege framework, which is a truly extensible architecture that allows us to add additional sources on demand. And so HYCU’s mission is eliminating data silos for data protection. And we’re certainly on a mission to make sure that we use the HYCU Protege architecture as the underpinnings of a platform that we think is going to do just that.
You also mentioned moving toward an IPO. Any idea on the timing?
No, but that’s certainly the goal. We’re not really setting a timeline right now. But I will say that our ARR for last year grew 150 percent over the year before, and we’re going to grow more than that this year, and we’re really excited about it.
You mentioned Atlassian and Cisco coming in as strategic investors. Those were HYCU’s first two strategic investors, right?
That’s correct. The first two non-financial investors.
What does it mean for HYCU to have Atlassian and Cisco as strategic investors? What’s the benefit besides the dollar investment you get from them?
There’s so much. There’s a few major points here. One is that, first and foremost, Atlassian is the pioneer of product-led growth. And we certainly see HYCU driving toward a product-led growth strategy in the near future. So leveraging and working with Atlassian to learn from them and grow based on their expertise will be really powerful. When you look at Cisco and its Intersight platform, you look at all of the different ways that Cisco leverages their products and services to support customers around the world. And certainly HYCU is going to be excited to look at different ways to work with Cisco on a go-forward basis. There’s probably a lot more to come.
So at this point there’s no business relationship between Cisco and HYCU?
Cisco in our press release clearly points out that the multi-cloud storage-agnostic nature of HYCU’s platform and the Intersight platform at Cisco are both uniquely suited for one another. I think we’ll have to play a little bit of a wait-and-see game on that.
Does HYCU have an OEM or some type of strategic relationships with any other companies in the IT space?
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