Tegile Closes New $33M Funding With Lead Investor Western Digital, Looks To Grab Nimble Storage Business From HPE

All-flash and hybrid-flash storage vendor Tegile said it had raised more funding, this time with hard drive vendor Western Digital as the lead investor.

Tegile is also looking at Hewlett Packard Enterprise's pending acquisition of Nimble Storage, which competes with Tegile in the all-flash storage and hybrid-flash storage market, as an opportunity to grab some of its rival's channel partners.

This new $33 million tranche is a continuation of the Series D funding round that brought the company about $94 million nearly two years ago. Tegile has now raised $178 million to date, said Rohit Kshetrapal, CEO of the Newark, Calif.-based company.

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Kshetrapal declined to discuss in detail how much of a stake Western Digital has in Tegile. "It's a substantial amount," he told CRN. "Western Digital is a very good partner. We use their hard drives, SSDs, and controller cards, as well as SanDisk SSDs and cards. We also work together on the technology side."

Tegile and Western Digital have a strong partnership, Kshetrapal said. "Our job is to maximize it," he said. "We work together in the market to make Tegile stronger. Their investment helps us capitalize on it."

Kshetrapal declined to talk about the possibility that Western Digital might acquire Tegile. "Our goal is to stay independent at this point," he said.

Western Digital is currently Tegile's only strategic investor. Earlier funding rounds also included the participation of SanDisk, but Western Digital in late 2015 acquired SanDisk.

Kshetrapal said that Tegile plans to use HPE's acquisition of Nimble Storage, which is scheduled to close this month, as a way to reach out to Nimble Storage's channel partners who might be displaced as a result of the acquisition.

Nimble Storage partners will find a big difference with Tegile's product lines, he said. "Tegile has high-density flash storage with higher capacity points," he said. "We can fit a half a petabyte in a 5U space combining fast SSDs and dense SSDs. So customers get larger flash deployments at a lower cost."

Tegile also offers partners unified block and file data capabilities and the only vendor to offer de-dupe and compression across multiple grades of flash storage and across flash and disk capacity, Kshetrapal said.

Getting that new round of funding, especially with Western Digital as the lead investor, is a significant indication to customers that Tegile is here to stay, said Charlie Collins, director of sales at SecureData Technologies, an O'Fallon, Ill.-based solution provider and early adopter of Tegile's technology.

For a channel partner which has decided to not align itself with companies like Dell EMC or Hewlett Packard Enterprise, such an investment provides the confidence to use Tegile to compete with the larger vendors, Collins told CRN.

"As higher-end customers see Tegile's Western Digital alliance, it bodes well with our relationships with them," he said.

SecureData Technologies' primary partner is Cisco, but working closely with companies like Dell EMC or HPE would entail adopting a wide range of their technologies, which would impact its Cisco relationship, Collins said.

"That's not the way we align our business," he said. "If a customer comes to our website, it sees our alliance with Cisco and with younger, more hungry companies like Tegile who want to invest in our success."

SecureData has been a Nimble Storage partner, but has decided to support Nimble only until the acquisition by HPE closes, Collins said.

"Our traditional alliance in networks is with Cisco," he said. "We feel that, if we align with HPE on storage, they'll want us to make commitments to products beyond storage."

Tegile has done a good job of running its business in a conservative fashion, and can get a lot accomplished with the new funding round, said Mark Galyardt, executive vice president at XIOSS, an Atlanta-based solution provider and Tegile channel partner.

"I've seen Tegile investing more in product and channel development, we like their multi-protocol technology," Galyardt told CRN.

XIOSS has never had any problems with Tegile, Galyardt said. "As a partner, you like not getting certain phone calls, especially for tech support," he said. "Tegile has been really good to work with. Its technology works as advertised, and is competitive with anything out there."

Tegile is not yet a profitable company, and is not yet cash flow positive, Kshetrapal said.

"For any systems company today, it's important to be cautious as we expand," he said. "For us, the biggest part of our expansion is how to be efficient in our go-to-market activities. In the last couple of years, we've decreased our burn rate. We're working to get profitable as quickly as possible. Remember, Nimble Storage, Pure Storage, or Nutanix aren't profitable."

Looking forward, Tegile will continue to invest in its product line, particularly in high-performance NVME flash storage, Kshetrapal said.

"Our products have been NVMe-ready since late last year, but we've been waiting for the drives to be available," he said. "We want to be ready for the next step in storage: working at the speed of memory."