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Khosla bolsters bet on Nutanix mafia with Rubrik investment

Vinod Khosla of Khosla Ventures
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Vinod Khosla of Khosla Ventures

Vinod Khosla, the venture capitalist who co-founded Sun Microsystems in the 1980s, is betting big that the Nutanix mafia will transform business computing.

Khosla led a $61 million investment in Rubrik, a provider of data backup and recovery technology, in a deal announced Tuesday.

Rubrik co-founder and CEO Bipul Sinha was among the first investors in Nutanix and remains on the board of the cloud-based storage and computing company. Khosla Ventures is the second-biggest Nutanix shareholder, behind Lightspeed Venture Partners, Sinha's former employer.

Khosla's firm also invested in ThoughtSpot, a business intelligence software vendor led by Nutanix co-founder Ajeet Singh.

Rubrik has now raised $112 million in the past 17 months, while Nutanix is on file to go public and ThoughtSpot announced a $50 million fundraising round in May.

"All three have exceptional teams," said Khosla, in an interview. In addition to the personnel overlap, Khosla said each company is in "a large market that hasn't had much innovation."

Rubrik, based in Palo Alto, California, is attacking a part of the technology industry that even its CEO has called boring.

Backup and recovery have been necessary evils for corporations. Businesses have to pay for the protection, because when documents are lost, hacked or destroyed, it's often critical that they get retrieved.

The co-founders of Rubrik
Source: Rubrik
The co-founders of Rubrik

As an investor in enterprise computing companies, Sinha saw businesses moving to the cloud with a whole new set of web-based and mobile applications. But the backup systems they were using hadn't evolved in decades. In fact, CommVault Systems, which Gartner identifies as the leader in data center backup and recovery, shrank 2 percent last year.

Rather than just developing new high-powered recovery systems to work speedily in the cloud, Rubrik also focuses on data management so that customers can make valuable use of their stored information. That way it's not just a costly insurance plan.

Rubrik is now helping businesses that are using legacy technology move to cloud infrastructure like Amazon Web Services by managing the transition and securing the data.

"In backup and recovery, people spend money on it because it's essential, and the best case is you hope you never touch that system at all," said Khosla. "That's a pretty wasteful use of dollars."

Rubrik has been rapidly expanding to meet global customer demand, said Sinha. The company has grown from 30 employees at the time of its last funding round in May to 160 today, and sales are doubling every quarter.

A funding round of this size and stage would typically imply a valuation of about $500 million. Sinha wouldn't comment on the terms. He did say that enterprises are spending on average $250,000 initially with Rubrik, and 30 to 40 percent of clients are buying more within six months.

"The deal size shows that we're selling into a market segment that has super high potential to scale," Sinha said.