Pure Storage Gets $150M Funding, Talks Big Plans For All-Flash Storage Arrays

Pure Storage has closed what it called the largest-eve funding for an enterprise storage company, giving it an extra $150 million in the bank. And, with a new high-level board member and IPO plans, the all-flash storage array vendor has the confidence to stand toe-to-toe with its more well-known competitors.

Included in the Series E round of funding were such high-powered investors as T. Rowe Price, Fidelity Investments and Tiger Global Management, as well as strategic investors including Samsung Ventures and In-Q-Tel, the investment arm of the U.S. intelligence community.

Pure Storage also said that Frank Slootman, former CEO of Data Domain before it was acquired by EMC, has joined the company as both a board member and strategic advisor.

[Related: Pure Storage Releases All-Flash Array Priced More Like Disk Array ]

With the new $150 million, total funding in Pure Storage now amounts to $245 million, said Dave Hatfield, president of the Mountain View, Calif.-based company. Pure Storage estimates the round gives the company a total value of over $1 billion.

Pure Storage, which develops all-flash storage arrays based on the company's own software combined with commodity flash hardware, doesn't necessarily need all that money to succeed, Hatfield told CRN.

"But for us, it's an opportunity to double-down on R&D," he said. "We already have an 18-month to 24-month lead in technology. We also want to extend our market reach. We are currently in 10 markets outside North America, but there others we can reach."

Pure Storage took advantage of the Thursday close of this week's VMworld conference to hold its first-ever user conference, Hatfield said. About 400 people were invited with the expectation that maybe 100 would come, but Hatfield estimated that over 400 people attended, including about 100 personnel from the company's channel partners. Most users came at the invite of their channel partners, he said.

A couple of those users were brought to the meeting by John Woodall, vice president of engineering at Integrated Archive Systems (IAS), a Palo Alto, Calif.-based solution provider and Pure Storage partner.

Woodall said it was pretty amazing to see the vendor pull off such a large user meeting so soon in its history.

NEXT: Looking At An All-Channel Strategy

Just as amazing is Pure Storage's huge funding round with the kind of investors who invest in IPO-bound companies, as well as its ability to recruit Slootman as a board member and its commitment to the channel, IAS' Woodall said.

"Pure Storage is saying it has a viable plan," he said. "They're selling products customers want. We're on the cusp of something we haven't seen for a very long time: An independent enterprise storage company starting up on its own and going public."

For the company, there are two reasons for the current round of funding, Pure Storage's Hatfield said.

The first is to send a clear message to its partners, customers and investors that the company is here for the long-term. The second is that, with investors like T. Rowe Price and Fidelity, Pure Storage is a potential pre-IPO company. "This shows we are not necessarily looking to be acquired," he said.

About 95 percent of Pure Storage's business is fulfilled through indirect sales channels, with the goal to eventually reach 100 percent, Hatfield said.

"The channel is the best and most efficient way for us to ramp our revenue, which has been growing 50 percent quarter over quarter," he said. "The only way we can keep up that pace is with a best-in-class partner community."

During the second quarter of 2013, over 50 percent of Pure Storage's bookings were channel led, an accomplishment Hatfield said is pretty amazing given that the company's Pure Storage Partner Program, or P3, was enhanced only in the last couple months with new tiers based on volume sales.

"We have about 100 channel partners now," he said. "About one-in-four are already tracking to do $1 million or more in sales for the year."

Pure Storage is looking to break away from a pack of competitors that includes such relative startups as Newton, Mass.-based Kaminario and Boulder, Colo.-based SolidFire.

However, competitors also include well-established legacy storage vendors, which are moving quickly to develop an all-flash storage array business. These include EMC and its XtremIO acquisition and NetApp and its FlashRay plans, along with companies like Hitachi Data Systems and Hewlett-Packard, which have introduced all-flash versions of existing arrays.

NEXT: Dissing Competing Companies, Technologies

Pure Storage's Hatfield dismissed the company's competitors, including the large storage vendors, which in the past have claimed that startups in the flash storage market suffer from a lack of a complete software stack to go with their new hardware.

Hatfield said many of the competitors have copied the Pure Storage model of building all-flash storage arrays with a combination of software and commodity flash components. However, he said, his company's software has had more time to mature than the startups, while legacy vendors have either not yet started selling all-flash storage arrays or have tried to build their products on a foundation designed for hard disk storage.

He also said that hybrid SSD-hard disk storage arrays are good for many applications, and that SATA hard drives will always be lower in cost than the equivalent capacity in flash.

However, he said, once companies see how the performance of all-flash storage impacts their operations, it can be hard to go back to other technologies.

"It's like having flash in your MacBook Air," he said. "Once you get accustomed to the speed, it's hard to go back."

PUBLISHED AUG. 29, 2013