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Pure Storage gets $150M to grow now, IPO later

Three days after Violin Memory filed to go public, another all-flash startup Pure Storage today closed a whopping $150 million funding round.

Pure calls it the largest private funding round in the history of the enterprise storage industry, and I don’t think anyone would argue. (Dropbox raised $250 million in a 2011 round, but it’s not really an enterprise storage company). The vendor’s release also calls it a “pre-IPO” round but the massive funding may actually delay Pure’s filing to go public.

Pure CEO Scott Dietzen said the funding will help the company grow fast and work up to an initial public offering, and he expects the buildup to an IPO will help him recruit top talent.

In the meantime, the well-funded (a total of $245 million over five rounds) startup is duking it out with EMC and other large storage companies.

“We see EMC as our closest competitor, so we want to get big quick,” he said. “How can we compete with EMC unless we grow fast?”

Dietzen said he believes Pure has an 18-month technology lead over EMC’s XtremIO flash array, which is still in controlled release. Pure considers its data deduplication and compression a competitive edge over the established storage companies and the handful of all-flash startups.

Dietzen said Pure has been growing revenue about 50% every quarter since its started shipping its FlashArray in May 2012. He said he is in no hurry to go public or get profitable. The goal is to grow as fast as possible.

“It’s not our intent to purse profitability quickly,” he said. “We’re taking everything we derive from sales and investing it back into the business. We see this as a market land grab, and if we want to contend with the big guys we have to get big fast.”

He said the size of the funding round also sends a message to customers and prospects that Pure intends to stay around as an independent company.

“When we talk to customers they ask, ‘Aren’t you guys going to get sold at some point? Who’s going to buy you, we want to know who we’ll be dealing with?’” he said. “But it’s always been our intent to build a long-term independent company.”

According to market research firm Garnter, Pure had $20.6 million in revenue in 2012 when its products had been generally available for little more than half the year. That put it at 5.8% of the flash array market, behind Violin ($72 million), EMC ($61.2 million), IBM ($56 million), NetApp ($42.2 million), Hitachi Data Systems ($25.7 million) and Nimbus Data ($21.8 million).

Dietzen said the new money will enable Pure to ramp up sales and marketing to support international growth with a concentration on Asia, Europe and Latin America. He said Pure stands at more than 240 employees today, and expects to add at least 100 more before the end of 2013 and hit 600 in 2014.

He pledged to continue to spend on research and development, too.

“We’re holding up well relative to our competition, but relevant to our own aspirations, there is still work to be done,” he said.

Pure also added early investor and former Data Domain CEO Frank Slootman to the board. Former Data Domain chairman Aneel Bhusri is already on the Pure board. Bhusri and Slootman took dedupe pioneer Data Domain public in 2007 and two years later sold the company to EMC for $2.1 billion.

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