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Pivot3 pockets $45M to ride hyper-convergence wave

Pivot3, the hyper-convergence vendor that concentrates on the surveillance and virtual desktop infrastructure (VDI) markets, picked up $45 million in funding this week to expand sales and marketing of its vStac appliances.

Pivot3 CEO Ron Nash said the company will rapidly expand its workforce, which stands at 92 today. He said the goal is to hire 17 people in each of the next two quarters, mostly in sales and marketing with a few developers. He said the company is looking to double its growth rate in the security market this year.

Nash said Pivot3 has more than 1,600 customer systems installed. “The first product most people buy from us is surveillance,” he said. “We started going into broader applications because after we installed the first system for video surveillance, they ask us, ‘Can we run Microsoft Exchange or something else on it?’ We say, ‘Yeah, sure.’”

Pivot3 began selling what it called “Serverless Computing” appliances in 2008, moving the application server into the storage node along with Xen hypervisors. That was hyper-convergence, although no one used that term at the time. The original use case was storage for surveillance video, and then the vendor launched VDI appliances in 2011.

Pivot3 originally sold software only on appliances, but recently began selling its software separately for customers who want to install it on blades for VDI.

The hyper-converged market is taking off, with VMware making a splash with its Virtual SAN (VSAN) software and its large partners such as Dell, Hewlett-Packard, EMC and NetApp who sell VSAN through VMware’s EVO:RAIL program. Dedicated hyper-convergence startups Nutanix, SimpliVity, Scale Computing, Maxta Software and Nimboxx make it a crowded market.

“Hyper-converged infrastructure is a nice topic of conversation among people, there’s a lot of activity,” Nash said. “There’s a huge wave.”

Nash said the entrance of VMware and the other large vendors could help Pivot3 by bringing attention to the market. Now it’s up to Pivot3’s expanded sales team to convince people that Pivot3 does hyper-convergence better than the others.

“The whole purpose of hyper-convergence is to give you better capabilities and a better price,” he said.

New investor Argonaut Private Equity led the round, which included S3 Ventures, InterWest Partners, Mesirow Financial Private Equity and the Wilson Sonsini Goodrich & Rosati. Pivot3 received $12 million in funding last August, and has around $145 million in total funding.