Lightspeed Ventures Positions For The New Age of Data With Investments in Storage Space

Lightspeed Venture Partners has had a phenomenal run in the next generation storage market. In the past 12 to 14 months, four of its portfolio companies have been acquired and one has gone to IPO. Here they are:

XtremIO sold in May to EMC for an estimated $430 million.
In June, SK Hynix said it will acquire Link-a-Media.
Portfolio company IO Turbine sold for $95 million to Fusion-io.
Fusion-IO, also a Lightspeed investment, had an IPO last summer. It is now valued at $1.7 billion.
Lightspeed sold its investment in Pliant Technology when SanDisk bought the company for $327 million last May.

This week the venture capital firm made an investment in storage provider Avere Systems. The Series C funding round was led by Lightspeed and also includes previous investors Menlo Ventures, Norwest Venture Partners and Tenaya Capital. Avere has now received $52 million in overall funding.

Avere Systems gives a window into the disruptions facing storage companies and why Lightspeed has had such success by investing in the sector.

Lightscale Partner Chris Schaepe says flash, virtualization and the cloud are the big disruptors in the storage market.

Flash makes data available far faster than hard disk, which relies on mechanical parts to spin its discs. That’s increasingly important in this age of big data. Hard disks don’t spin fast enough to manage the new deluge of data that runs in and out of the enterprise.

Virtualization has allowed companies to consolidate its servers but with a storage cost. It often means finding new ways to keep the apps running at the same performance level. Servers get overloaded as virtualization taxes the system. New storage environments are needed to accommodate virtual machine loads.

Cloud computing has changed the way IT views the enterprise. Over the next few years, we will see continued focus on how companies turn IT into a service. They will need ways to bridge its existing infrastructure with public, scaled out architectures from providers such as Rackspace and Amazon Web Services.

Schaepe says that Avere is at the center of this disruption. It has hardware that speeds up performance by caching data and integrating a hierarchy of storage media from DRAMthrough Flash memory and disk drives. This allows the most frequently accessed data to be served quickly. Less frequently accessed data is migrated to slower and cheaper storage tiers such as storage disk systems.

For Schaepe, it makes for a compelling story. Avere’s “edge filers,” helps an enterprise provider get better performance. Capacity issues are handled by traditional disk-based storage. That means companies don’t have to keep adding storage boxes to optimize performance. Performance is managed by the edge filers. Avere is also well-suited to companies adopting the cloud as the technology is designed to integrate on-premise and off-premise infrastructure.

Looking from the outside, it’s the data story Avere offers that I find most compelling. Avere’s products helps IT organizations consolidate the management of distributed data across different locations and vendors. The data is pooled, That solves a key challenge. Data is often left in solos. By pooling it, a company can capitalize on its data assets.

Schaepe said Lightspeed identified disruptive trends in the storage about five years ago. They saw the price of Flash and DRAM begin to drop. That became a critical factor for the innovation cycle. It helped startups innovate with next generation storage architectures that fit well with the maturing trends in IT around virtualization and scale-out architectures. Other Lightspeed portfolio companies:

Tintri combines Flash and disk media. it has developed a storage management software that is customized for the needs of needs of virtual machines.
Nimble combines primary storage and backup in a system with Flash and disk media.
Nutanix combines compute and storage. That allows for consolidation of infrastructure environments – a huge priority as companies seek to shed their data centers.

Data is the disruptor. Lightspeed seems to understand this by investing in companies that will be crucial in shaping next generation architectures for the new age of data.