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Like Newton’s apple, startup DataGravity lands with a thud

Data-aware specialist DataGravity apparently is the latest casualty in a suddenly rough market for storage startups. Industry sources say the vendor has shuttered operations and sold its storage technology to an undisclosed buyer in a fire sale.

(Note: After this story posted Thursday, DataGravity CTO Dave Siles called to say the company continues to function, and will have news of a new owner next week.)

DataGravity was the second startup for CEO Paula Long, who started iSCSI pioneer EqualLogic in 2001. Dell acquired EqualLogic for $1.4 billion in 2008. Neither Long nor the other DataGravity founder John Joseph responded to requests for comment. A person who works for a company that invests in storage startups said Joseph left the company several months ago.

DataGravity started selling storage appliances in 2014 and amassed $92 million in investment funding, but it never came close to turning a profit. Its last venture capital round was a $50 million Series C round from Accel Partners in December 2014. Andreesen Horowitz, Charles River Ventures and General Catalyst Partners also invested.

As the private equity market dried up, it turned to debt financing to stay afloat. According to Pitchbook, DataGravity completed a $22.5 million loan in February 2016 – roughly the same time it started to fire an unspecified number of employees. At that time, DataGravity went to a software-only model and sought reseller partnerships with storage vendors.

The startup’s unified hybrid “data-aware” Discovery Series arrays were designed to secure data at the point of creation. Discovery Series arrays analyzed metadata to determine which users had accessed a data set and sent alerts when changes were made.

The focus on data management and data security was likely too narrow. DataGravity was overtaken by fellow data-aware startup Qumulo Inc., which is heavily populated with engineers and former executives of Isilon (now part of Dell EMC). Qumulo’s Linux-based Core scale-out NAS software is sold on its branded QC Series hardware, on Hewlett Packard Enterprise servers through an OEM deal, or available as a subscription. Qumulo also continues to rack up funding, pocketing $30 million in April to bring its total to $127 million, although it too has yet to post a profit.