Hyper-Converged Infrastructure Firm Scale Computing Gets $18M Funding

Hyper-converged infrastructure solution developer Scale Computing this month closed a new round of funding, a round the channel-focused company said should carry it through to becoming cash-flow positive.

The new round, worth $18 million, brings total funding of the Indianapolis-based company to about $61 million, which includes $3 million in funding from an Indiana state program to help local startups, said Jason Collier, the company's co-founder and chief technology officer.

It is the company's largest of its "six or seven" rounds of funding, Collier told CRN. The new round will be used to expand is channel and to grow more quickly outside the U.S., he said.

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"We are careful with smaller funding rounds. We don't want to be a unicorn," he said, referring to startups with abnormally high valuations. "Unicorns don't exist."

However, Scale Computing's solution exists. The company is approaching 1,200 customers, primarily in North America, and all through channel partners, Collier said.

Scale Computing develops the HC3 line of hyper-converged infrastructure solutions, which integrate storage, servers and virtualization software into an all-in-one, 1U-high appliance-based system. Those appliances are scalable, with self-healing and easy management capabilities, he said.

Customers are primarily small and midsize businesses, as well as the remote and branch offices of some enterprises and universities, Collier said.

"There's not a lot of glory in the SMB market," he said. "But we target one-person to five-person shops, where it is important to have a complete solution."

An entry-level solution costs about $25,500, Collier said. The company's average deal is about $50,000.

Collier said Scale Computing over the next several quarters plans to introduce new models of its HC3 hyper-converged infrastructure appliances featuring tiered storage with the ability to move data automatically between SSDs and SAS and SATA hard drives.

The company also plans to release the ability to define performance for individual virtual machines, followed by new ways to scale either with more SSDs for performance or more hard disks for more capacity, Collier said.

Scale Computing has turned out to be a great fit for the SMB market, said Frank Leonard, managing partner at Leonard-McDowell, a Zionsville, Ind.-based solution provider and Scale Computing channel partner.

"We've used the company's technology for companies with up to 500 employees, and had success with local school systems," Leonard told CRN. "One school has already reordered."

Leonard said he likes Scale Computing's strategy of not taking any more investor funding than it really needs. "They want to stay out of being controlled by the investors," he said. "They're trying to scale on their own while keeping customers happy."

Scale Computing was one of the first companies to market with hyper-converged infrastructure solutions, Leonard said.

"We've been focused on the company as a partner for a long time," he said. "We try to be loyal to our partners. We've never had any real problems with them."

PUBLISHED JULY 24, 2015