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Pivot3 closes funding round to develop ‘new toys’

Hyper-converged vendor Pivot3 closed a $55 million funding round this week to support expansion following a merger with flash array vendor NexGen Storage.

Pivot3 CEO Ron Nash said the bulk of the funding would go towards integrating NexGen technologies into Pivot3 products and vice versa. The two companies merged in January.

“We’re putting the biggest part of it in product development,” Nash said of the new funding. “We like the products NexGen has, but we like even more what we could do jointly given the base of both companies and both sets of technologies. We have a bunch of products we can put together.

“We have more things to play with and I want it to go faster.”

Nash said quality of service and dynamic provisioning are key NexGen technologies that you can expect to see in Pivot3 products, while Pivot3’s erasure coding could end up in NexGen arrays. Multiple hypervisor support is another roadmap item for Pivot3, which current only supports VMware ESX. Nash said the current headcount of around 230 will probably rise about 20% this year, and the vendor will keep “equal size” offices in Houston, Austin, Texas and Boulder, Colorado. “We’re not calling any of those offices headquarters,” he said.

Nash said funding will also be spent on sales and marketing.

Pivot3 has raised $247 million in funding since its inception in 2003, including a $45 million round in February 2015. Previous investors Argonaut Private Equity and S3 Ventures were involved in the current round along with several undisclosed investors. Nash said none of the funding came from strategic investors.

That funding total isn’t much compared to hyper-converged rivals such as Nutanix ($312 million) and SimpliVity ($276 million).  SimpliVity raised $175 million in one round in 2015, and Nutanix raised $140 million in a 2014 round.

“Those companies put so much into sales and marketing,” Nash said. “I put a lot more in product development, playing for the long term. Hurling it into sales and marketing will be a short-term boost but you have to invest in products.”