Converged-infrastructure startup SimpliVity lands $175M with valuation above $1B

SimpliVity, a startup that sells data center hardware aggregating components typically sold separately — servers and storage boxes — is announcing today that it’s picked up a major funding round totaling $175 million.

The money, which now gives SimpliVity a valuation in excess of $1 billion, puts the startup in a position to more seriously challenge publicly traded companies in the converged-infrastructure business, whose fast growth is somewhat reminiscent of the fast rise of server virtualization. That technology lets companies run multiple applications on each physical server and thereby reduce their server footprint.

Another startup, Nutanix, has grown into a formidable entity with a valuation above $2 billion, but SimpliVity’s chief executive, Doron Kempel, believes his company’s products are superior.

“Unlike Nutanix or EVO:RAIL [from VMware], this is not just storage and server — it’s everything,” Kempel told VentureBeat in an interview.

SimpliVity comes with software for smartly working with data, including data protection and de-duplication, as well as cloud-gateway capability for interacting with external cloud storage services.

“We’re very comfortable competing against them,” Kempel said of Nutanix.

Currently, SimpliVity’s gear only supports VMware’s hypervisor for setting up several virtual machines on each physical server. But soon enough the startup will add support for Microsoft’s Hyper-V and also the open-source KVM hypervisor, Kempel said. Support for ARM-based processors — not just standard x86-based chips — could also be coming, he added.

SimpliVity has reseller deals in place with Cisco and Dell. (Nutanix also has a Dell deal.)

Kempel said the startup has more than 300 customers, including Dairy Farmers of America, MLB Network, Swisscom, T-Systems, and the Worcester County (Mass.) Sheriff’s Office.

SimpliVity started in 2009 and is based in Westborough, Massachusetts. It announced a $58 million round in November 2013.

Waypoint Capital, which has its roots in the biotechnology industry, is leading the new round in SimpliVity, putting up $150 million in the startup.

Accel Partners, Charles River Ventures, DFJ Growth, Kleiner Perkins Caufield & Byers Growth, and Meritech Capital Partners also participated in the round. To date SimpliVity has raised $276 million, counting the $58 million round announced in 2013.

This is Waypoint’s first tech investment. Not surprisingly, Fred Wohlwend, Waypoint’s chief information and technology officer, is a big believer in SimpliVity.

Waypoint bought 11 OmniCubes — SimpliVity speak for its hardware — to sit inside five data center sites, Wohlwend said.

“We have reduced the number of servers we had by 35 percent, we have increased our storage capacity by 12x, and we have increased our computing power by 4x, while reducing our TCO [total cost of ownership] by 3x,” Woldwend told VentureBeat.

And that clearly communicates the appeal of converged infrastructure, which is why companies like Microsoft and VMware are getting into it. The question is what happens to currently privately traded companies like SimpliVity.