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Enterprise startups: The cream of the new innovation crop – Tech Pro Research

Enterprise software firms are in the spotlight. These firms, which sell software to businesses to enable them to do business better, raised $5.4 billion in capital in the first half of 2014. That was roughly the total amount raised in 2013, reports TechCrunch.

This article profiles 10 younger startups that are part of that wave. They were founded in 2009 or later and are based in the United States. These firms to date have raised the most capital among this new crop of enterprise software firms, according the Crunchbase search engine. Note that although Cloudera can claim a sizable piece of the $5.4 billion noted above, it was founded in 2008, earlier than my search parameters.

The 10 startups

Why enterprise tech, and why now? There’s a belief among investors, reports Jonathan Schieber, that a huge change in the way technology affects business is afoot. And compared to 2013, the increase in funding accompanies a decrease in commitments to new firms, meaning that this current crop of startups is maturing.

The 10 enterprise tech startups, listed in order of capital raised, are: Pure Storage, Hortonworks, CipherCloud, Smartling, PernixData, Zerto, ZEFR, Skyera, Kenandy, and 2nd Watch.

1: Pure Storage

This is a startup success story — not many firms have raised $475 million in capital and reached a market value of $3 billion within five years. In a November 2014 interview with Inc., CEO Scott Dietzen said that his company is growing 400% per year.

Up-and-coming Pure Storage is rubbing shoulders with tech company EMC. But the jury’s still out on how much business it’s claiming from its more established rival. According to a claim made by CEO Dietzen, Pure Storage may be winning 70% of its competitive battles with EMC in a Tier I storage market worth $15 billion, which is not seeing a lot of growth. EMC claimed that it wins 95% of the time in bids for “pure flash.” Prior to a Pure Storage IPO, no one can say for sure.

Also in November 2014, Pure Storage announced an expanded Forever Flash program to end what it calls “maintenance extortion” in the storage business. For new and existing customers, it’s promising flat or better maintenance, no out-year pricing increases, and free upgrades with a three-year contract renewal.

2: Hortonworks

Hortonworks, the startup, is now seeking to stop being one. The company filed a form S-1 with the SEC in November 2014 to hold an IPO. An amended S-1 shows it will be traded on Nasdaq under the symbol NDP; the IPO is priced at $12 to $14 per share with 6 million shares of common stock to be sold.

In July 2014 HP invested $50 million in a play to integrate big data analytics customers. Previously, Hortonworks has partnered with EMC’s Pivotal Initiative, BMC Software, Red Hat, and Accenture. In May, the firm acquired XA Secure to build up its Hadoop security posture. In September 2014, Hortonworks said it had 233 subscription customers and 292 total customers “across a broad array of company sizes and industries.”

In other news, Hortonworks in October 2014 won the Teradata EPIC award for Big Data Intelligence at the Teradata PARTNERS Conference in Nashville for a second year in a row. The Teradata EPIC Awards recognize its customers and partners for their “leadership in implementing data and analytics solutions.”

3: CipherCloud

Speaking of venture capital, that’s the news for CipherCloud, which closed a $50 million Series B round of financing in November 2014 that will be used to support its go-to-market activities, international growth in Europe and Asia, adoption of the its enterprise cloud security platform, and product innovation. Transamerica Ventures led the round and was joined by Delta Partners, along with existing investors Andreessen Horowitz and T-Venture, the VC division of Deutsche Telekom.

In a statement, Georg Schwegler, CEO of Transamerica Ventures, said, “CipherCloud is successfully helping enterprises to securely adopt cloud applications with its innovative portfolio of cloud security solutions and is poised for impressive growth. Transamerica Ventures has strong confidence in CipherCloud, given its leadership’s track record, its growing customer base and expanding partner network.”

Kristoff Puelinckx, group co-managing director of Delta Partners, said in a statement, “CipherCloud has established a global leadership position right at the intersection of two of the most interesting trends that we are seeing, namely the continued migration of businesses to cloud services and the need for greater data protection required by both regulators and customers,”

4: Smartling

Smartling has just been named to the 2014 EContent 100, a ranking of digital content industry members by EContent Magazine. Smartling won in the “content creation” category.

“Digital content is a company’s most powerful asset,” said CEO Jack Welde, in a statement. “When the right content is developed, it can drive brand awareness, revenue and customer engagement. Smartling is all about helping companies make the most of their digital content by easily, efficiently and affordably translating it to fully reflect the way their customers live, act and speak.”

Outsourcing language services is a $35-billion-a-year business, reports Forbes, building on rapid overseas expansion by large and small companies. Smartling, an early mover in that market, now has more than 300 clients, including Uber, Spotify, and Tesla.

Here’s how it works: Smartling has a translation hub that does away with document-based translation. Its system automatically pulls new client content and delivers it to preapproved translators. The firm contracts with thousands of translators and has a staff of 160.

5: PernixData

With growth comes a new global headquarters. PernixData has just moved into new offices on Technology Drive in San Jose, which it claims will “quadruple” its presence in Silicon Valley. The company announced it has 300 paying customers in 20 countries and that its FVP software is handling 150,000 virtual workloads globally.

In a statement, CEO Poojan Kumar said, “We are pleased to move into a beautiful new facility that allows us to grow the company in all strategic areas of business. PernixData’s new headquarters is a key step towards bringing decoupled storage to every virtualized data center across the globe, with FVP software the de facto standard for server-side storage intelligence.”

In August 2014, PernixData closed a $35 million Series C round led by Menlo Ventures, with Salesforce CEO Mark Benioff, along with existing investors Kleiner Perkins Caulfield and Byers and Lightspeed Ventures.

Poojan Kumar told the Silicon Valley Business Journal that “Our customers are recognizing that instead of having their storage tied to a box that after a year starts to look really old, they invest in software that gives them more flexibility as hardware evolves.”

6: Zerto

In November 2014, BCDR firm Zerto announced that its offering for Amazon Web Services will be previewed at the AWS re:Invent in Las Vegas, with the goal of extending enterprise-grade disaster recovery to the public cloud.

“Zerto Virtual Replication to AWS is the next step in our Cloud Fabric strategy, which allows customers to select their IT infrastructure based solely on their business needs, regardless of underlying storage, hypervisor or cloud provider,” said CEO Ziv Kedem, in a statement.

In June 2014 Zerto closed a $26 million Series D round of funding led by Harmony Partners. The firm claims more than 500 enterprise customers and 100 partnering managed cloud providers.

According to Mark Lotke, managing partner of Harmony Partners, “We talked with a wide range of customers, managed service providers, and VARs who surveyed the market for a hypervisor-based data replication software solution. The recurring theme we heard was that Zerto does exactly what it says it does.” He added, “Zerto has become the clear market leader in hypervisor-based disaster recovery and there is a broad use case for their technology, with many additional applications beyond DR.”

[Disclosure: Zerto is a copywriting client of author Brian Taylor.]

7: ZEFR

ZEFR is a firm in Southern California, not Silicon Valley, and in November 2014 it made the socalTECH 50 list of tech biz individuals to watch — in SoCal. These are the people “most likely to create the next big thing,” minus the businesspeople on last year’s list, well known serial entrepreneurs and “power players” in SoCal tech. Both Zach James and Richard Raddon were named to the list.

ZEFR from the outset has been focused on YouTube, but in September 2014 it acquired Utah-based Engodoto broaden its reach. Engodo is designed to match up brands on social media with content creators on Vine, Instagram, Pinterest, Snapchat, Facebook, and Twitter, in addition to YouTube. ZEFR issued $886,939 worth of its stock to complete the Engodo deal, according to an SEC filing.

“ZEFR is the thought leader connecting brands and fans through technology. We knew we could do more with ZEFR and we wanted to be part of that growth,” said Engodo founder Trygve Jensen in a statement. “The opportunity provided by combining ZEFR’s leadership and Engodo’s assets completely changes the landscape of influencer marketing.”

8: Skyera

Skyera in October 2014 announced its second-generation solid-state array. Skyera skyHawk FS allows companies to “upgrade their legacy storage platform to flash-based storage at the price of traditional spinning disk technology.” The firm claims that the skyHawk FS occupies 99% less space and consumes 97% less power with price points equal to legacy enterprise disk storage systems.

In a statement, Mark Peters, senior analyst at ESG, said, “With the increasing volume of data that needs to be stored and analyzed by contemporary enterprise applications, there is an increasing pressure on IT organizations to develop strategies to help them gain the upper hand in effectively and efficiently managing their storage. Rather than simply deploy more and more traditional equipment into the data center — which uses more power, space, cooling and management — Skyera’s innovative use of flash technology to provide extremes of both capacity and performance can help organizations save on their capital and operational expenditures and positively impact their bottom line.”

In August 2014, Skyera’s investors provided an undisclosed amount of additional capital. At that time former COO Frankie Roohparvar become CEO, and founder Dr. Radoslav Danilak transferred to the CTO role.

9: Kenandy

With more than 30 years in the industry, Kenandy founder Sandra Kurtzig, writes Barron’s, is “one of the most successful women in the tech world.” Kurtzig guided one of the big tech IPOs in the 80s, taking her first company, ASK Computer Systems, public in 1981, after Apple went public and before Microsoft. She also has friends in the tech industry who are household names, one of whom — Salesforce CEO Mark Benioff — convinced her to leave retirement in Hawaii and pursue cloud ERP firm Kenandy.

At Salesforce’s Dreamforce 2014 conference in October, Kenandy announced it was joining the Salesforce Analytics Cloud ecosystem. The integration with Salesforce Analytics Cloud will permit Kenandy customers to combine their cloud ERP information with multiple data sources to get a “complete view of all the factors that impact their business.”

In a statement, CEO Sandra Kurtzig said, “Customers are connected as they have never been before. By 2020, there will be 75 billion connected products in the world. With the Salesforce Analytics Cloud, our customers can harness the increasing amount of data that’s available to them in Kenandy, from their partners, and through their devices so they can act on it quickly and decisively.”

10: 2nd Watch

In November 2014, 2nd Watch announced Cloud Factory, a cloud workload management services offering for firms migrating to Amazon Web Services from traditional on-premises data centers. 2nd Watch is guaranteeing $2,000 per server deployments for Cloud Factory customers based on a 200-server minimum. Typical migrations can be completed in as quickly as six weeks — which it claims is well below the industry average.

According to Forbes, 2nd Watch is following the AWS example and “is fixing its server migration fee and essentially ‘productizing’ a service offering.”

In a statement, Doug Schneider, CEO at 2nd Watch, said, “We’re always looking for ways to bring greater value to our customers, and time and again we hear that companies want to move faster yet still meet expectations for a successful transition. Cloud Factory combines highly skilled consulting services with the latest technology tools to ensure a reliable cost structure for planning and implementation.”

In October 2014, 2nd Watch closed a $10 million Series C funding round led by Top Tier Capital Partners. Founder Kris Bliesner moved to the CTO role, and enterprise tech veteran Doug Schneider was appointed CEO.

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