Why Google's venture arm is betting big on data backup

Source: Cohesity

Mohit Aron has loaded up on former Google engineers to help build his start-up Cohesity for backing up data. Now he's getting a big check from the internet giant to expand into new products and regions.

Alphabet's venture arm — once called Google Ventures, now known as GV — said Tuesday it joined Sequoia Capital in leading a $90 million financing of Cohesity, with the aim of helping businesses make use of mountains of stashed-away data.

Secondary storage is the stuff that corporations typically archive or save for protection in case primary files get lost or corrupted. It sits on tape and disks in dark data centers. It's certainly not a subject you imagine drawing much attention in Silicon Valley, particularly in the halls of a company like Google.

But what if rather than sitting dormant, all that secondary storage could be used and accessed at any time?

Karim Faris, the GV partner who led the Cohesity investment, said his team had been looking for a product that could "light up" that data through software. GV put some money into the last round in 2015 and is now stepping up in a hefty way.

"Cohesity brings instant access, search, discoverability and the ability to restore data very easily," Faris said in an interview. "They figured out a way to seamlessly insert themselves into the flow of how you do things."

Cashin: Froth in venture capital market
Cashin: Froth in venture capital market

Aron is part of a small exodus of entrepreneurs from Nutanix, which pioneered a type of computing infrastructure known as "hyperconverged" storage that combines storage hardware with various types of software, all stored in a single inexpensive device that runs in a company's data center. Nutanix was one of the first big billion-dollar "unicorn" start-ups of the current generation, raising nearly $500 million to reach a valuation of more than $2 billion before finally going public last September. It's currently worth about $2.5 billion.

Aron co-founded Nutanix, then left in 2013 to start Cohesity; one of Cohesity's primary competitors is a start-up called Rubrik, which was started in 2014 by Bipul Sinha, a board member at Nutanix and major investor in that company.

Both Cohesity and Rubrik have turned to engineers from Google and other massive consumer internet companies to develop the next generation of backup technology for the business world. Aron said about 30 percent of his 35-person engineering team came from Google.

For its part, Rubrik raised a $61 million round in August and said in February that it's approaching $100 million in annualized bookings.

Ask Aron or Sinha whom they consider their primary competitors and both mention legacy hardware vendors with single-purpose boxes.

Aron said that in 80 percent of deals Cohesity is vying with companies like Commvault and EMC's Data Domain. His team scours the market for businesses that have switched another part of the business from a traditional vendor to something new. For example, companies that have moved from disk storage to flash make good prospects.

"It gives us an indication that they're looking for alternatives," Aron said.

The financing round includes capital from Cisco and Hewlett Packard Enterprise as well as a number of existing investors. Aron said the capital infusion will go toward building the company's sales and marketing efforts and pushing deeper into Europe and Asia.

As for product development, Aron said backup and data protection get customers in the door, but in the future businesses will turn to Cohesity for more advanced uses like analytics and test and development.

"That's where our R&D efforts are going," he said.