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Cloud storage startup Wasabi Technologies raises $68 million

Newcomer Wasabi Technologies will try to build up its brand recognition and take on the Big Three public cloud providers after raising $68 million in Series B funding.

“You don’t go up against Microsoft, Google and Amazon with pocket change,” said David Friend, Wasabi CEO and founder.

The Boston-based cloud storage provider launched in 2017 with about $8.5 million in its coffers from a 2016 Series A funding round, when the company was known as BlueArchive. Wasabi added another $10.8 million a few months later through a convertible note that folded into the recently closed $68 million Series B round.

Friend said Wasabi Technologies needs senior sales staff with expertise in vertical markets such as genomics, media and entertainment, and surveillance. The startup also plans to add in-house sales representatives to handle the growing volume of calls. Friend said Wasabi currently employs about 45 and could have 60 to 65 staffers by year’s end.

Friend wants to expand quickly to make it hard for newer competitors to get into the market. He said he took the same approach while CEO at Carbonite, one of the early cloud storage success stories in the consumer and SMB space.

“We’ve got about 3,500 paying customers, so it’s time to really turn up the heat and start building a sales force and the Wasabi brand and all that sort of stuff,” Friend said. “I wanted to start ramping up now that I feel comfortable that the technology is really solid and I could spend a buck on marketing and get four or five bucks back in terms of customer value.”

Wasabi Technologies claims business is growing at a rate of 5% to 10% per week. The startup stores data in its own equipment at colocation facilities in Ashburn, Virginia, and Hillsboro, Oregon. Friend said a new European data center will operate the same way when it opens in the fourth quarter. He declined to disclose the location of the new data center.

Friend said he knows what only about 100 or 200 of Wasabi’s 3,500 customers are doing with the cloud storage. He said the smallest customer might store a few TB, and the largest has 5 PB to 10 PB, with plans to expand to 50 PB to 100 PB.

Wasabi Technologies claims its cloud storage is cheaper and faster than Amazon’s Simple Storage Service, with no egress charges to extract data. Friend said most large customers with significant IT budgets shift data from huge tape libraries or on-premise storage reaching end of life.

Wasabi’s biggest customers are Hollywood movie studios and other media and entertainment companies, Friend said. With those customers in mind, the startup introduced a Direct Connect option in Hollywood and San Jose, California, to transfer data via a high-speed, dedicated pipe. Wasabi Technologies also offers Ball Transfer Appliances that large customers can fill up and ship back, similar to the Snowball option that Amazon has.

Who ponied up for Wasabi Technologies?

Instead of typical venture capital financing, Wasabi’s new funding comes from individual investors and family-run firms such as Forestay Capital, the technology fund of Swiss entrepreneur Ernesto Bertarelli. Friend said 117 investors contributed to Wasabi’s Series B round, including many repeat backers from the Series A funding.

“I started out expecting to raise more like $40 million, but even at $68 [million], I had to turn a whole bunch of people away. People were just flocking in. It was unbelievable,” he said.

New Wasabi investor Bertarelli is worth $8.7 billion, according to Forbes. His family sold biotech firm Serono to Merck for more than $13 billion in 2007, and launched the Waypoint Group five years later. Forestay Capital is Waypoint’s tech fund.

Friend said Wasabi’s investors are engaged and helpful. “Most of them are self-made people who have built businesses of their own, and they’re excited about being part of the company,” he said. “They are opening doors for us at customer sites. In a couple of cases, they’ve helped us recruit some senior people.”

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