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HYCU backup closes first funding round, eyes IPO
The HYCU backup and recovery platform gained a boost with a major funding haul. HYCU seeks to stand out in a competitive data protection market.
Privately funded since its inception, HYCU secured an $87.5 million Series A financing round Tuesday.
HYCU plans to add 100 new employees and will consider going public. Bain Capital Ventures, which led the funding round, understands the data protection market well and can help HYCU get to the next level, said CEO Simon Taylor.
Based in Boston, HYCU offers multi-cloud data protection. Its purpose-built backup and recovery started out supporting Nutanix and has since expanded to VMware, Google Cloud, Microsoft Azure, AWS and Office 365.
"Backup as a service has really entered its time," Taylor said. "COVID was a catalyst for that."
The pandemic's affect on data protection, funding process
How companies deal with ransomware has been a key element of data protection during the coronavirus pandemic. Taylor said many HYCU backup customers have been attacked. Some said their only safe data was in HYCU.
The pandemic exposed the fact that data stored in the cloud is not necessarily protected.
"Backup moved from being a second-class citizen to a first-class citizen," Taylor said.
The pandemic made closing a funding round an unusual process. As all meetings were remote, Bain and HYCU representatives never met in person.
"It speaks volumes about the simplicity of HYCU" and its true SaaS nature, Taylor said. For example, it would have been a more difficult proposition to demonstrate hardware remotely.
There were challenges. In a remote environment, it's important to replicate the physical experience of meeting, so both sides spent a lot of time trying to get to know each other personally, Taylor said.
Acrew Capital also participated in the HYCU backup funding round.
HYCU has already started recruiting for its new positions, with a focus on the Boston area. Sales and marketing and customer success are two key hiring areas, Taylor said. The company has 200 employees and aims to have 300 by the end of the year and 400 or 500 by the end of 2022.
"We want to pour gas into the tank," Taylor said.
A mixture of research and development (R&D) plus sales investment makes sense, said Krista Macomber, senior analyst at Evaluator Group.
"HYCU likes to go deep on optimizing for certain environments like Nutanix and Microsoft, and additional R&D support could help to bring solutions to market a bit more quickly while keeping the same standards for quality," Macomber said. "Additional sales support could help to increase HYCU's awareness and traction in these markets that have quickly become very crowded."
Next steps for HYCU
Taylor said HYCU backup has a number of competitors in the market, including legacy players such as Commvault and Veritas, as well as vendors focused only on cloud such as Druva.
Simon TaylorCEO, HYCU
Commvault is a public company. CEOs of several other data protection companies, such as Druva, Rubrik and Veeam, have said IPO plans are on the table.
"The IPO route is probably the most responsible one for us," Taylor said.
The need for true backup as a service is more important than ever, he said, and to get to an IPO, HYCU backup needs to ensure it is a market leader.
"What could make an IPO make sense is that HYCU is targeting growing areas of the market that are seeing investment -- like SaaS protection," Macomber said.
HYCU had existed under the Comtrade Software label, launching its first product in June 2017. The Comtrade Group spun off HYCU into a separate company in March 2018, when Taylor became CEO.
HYCU claims 2,000 customers. Taylor said he wants to drive awareness of the company worldwide. Just as Salesforce is considered the consummate CRM platform, Taylor wants HYCU to be the same for end-to-end backup as a service.
Though he did not provide specifics, Taylor said the company plans to expand across platforms and can natively integrate new services.
Support for Google Workspace could make sense given HYCU's existing Google Cloud service, Macomber said. Protection for other SaaS applications, such as Salesforce, is a possibility as well.
"I'd also look for some additional activity around containerized workloads, which are coming down the pike in terms of production usage -- meaning that their protection needs to be planned for," Macomber said.