Pure Storage Raises $225 Million at a $3 Billion Valuation
Pure Storage, the company shaking up the enterprise storage market with a data storage array based solely on flash memory, has raised $225 million in a late-stage round of venture capital funding at pre-money valuation of more than $3 billion.
The deal will be announced on Wednesday.
The Series F funding round is largely being led by previous institutional investors, including investment firm T. Rowe Price and the private equity firm Tiger Global, and one new investor, Wellington Management. Pure’s prior venture capital investors Greylock Partners, Index Ventures, Redpoint Ventures and Sutter Hill Ventures also participated, bringing the company’s total capital raised to $470 million in a deal managed by Allen and Co.
The valuation is roughly triple that of what Pure was valued at last August when it raised $150 million in a Series E led by T. Rowe Price and Fidelity.
Pure could probably file its S1 and go public now, but CEO Scott Dietzen says he’s in no particular hurry. “There’s some luxuries that we have as a private company that we want to preserve for a little while longer,” he told Re/code in an interview.
Dietzen estimates that Pure has a two-year lead in the technology race to replace enterprise storage arrays based on conventional hard drives with arrays based entirely on flash memory chips. The fundamental problem with enterprise storage is that conventional hard drives can’t keep up with everything else that’s gotten faster in the data center. Flash memory, like the type used in smartphones and some laptops, is fundamentally faster. It uses less energy and it takes up less space. Pure has delivered flash storage that is faster than disk-based storage, but also price-competitive.
The company plans to double down on research and development at levels that would seem unusually high for a publicly held company, Dietzen said.
Staying private, he says, will also help Pure continue to recruit as aggressively as it has. “In Silicon Valley the IPO is seen as a rite of passage that people want to participate in. People want to be there when it happens, and once you IPO some of that excitement is lost. A lot of people think all the fun is in the pre-IPO phase and so you want to get as many of them on board as you can.”
The company has been growing its sales at a year-on-year rate of about 700 percent, which is far faster than rival Nimble Storage, which makes storage arrays that use both hard drives and flash memory. Nimble, which went public in December, grew its sales 134 percent year on year.
Dietzen declined to put a timeline on Pure’s IPO plans. The company has yet to hire a CFO, for one thing, which is considered a key step in that process. “We don’t want to go public before we’re ready, and we have the luxury of being able to choose when that happens,” he said. “We won’t have to go public with a gun to our heads.”
The company competes heavily with enterprise storage giant EMC, which has recently sought to get into the flash array business on its own and bought Israel-based ExtremIO in order to compete against Pure. Last year, EMC sued Pure alleging that some of its former employees who had been recruited to Pure had misappropriated EMC trade secrets, a charge that Pure has denied. The suit is ongoing.